CANBERRA, AAP – The banking watchdog believes Australians should be getting better advice in managing their retirement nest eggs so people do not end up having unnecessarily frugal lives post-work.
Australian Prudential Regulation Authority deputy chair Helen Rowell says the superannuation and wealth management industry is far too focused on accumulating savings.
“Evidence shows that the majority of Australians do not adequately plan for their retirement or make the most of their assets in retirement,” Ms Rowell told a Australian Financial Review super and wealth summit on Monday.
“One of the problems with the ‘nest egg’ motif is that it puts a focus in the consumer’s mind on accumulating the largest possible pot of money and then sitting on it.”
She said the federal government’s recent retirement income review found many people die with the bulk of their life savings intact.
“Rather than a sign of generosity to the next generation, this is widely accepted as evidence that retirees often lack the necessary guidance or options to help them effectively manage their nest egg,” she says.
“And so often (they) are more frugal than needed in their retirement spending for fear of running out.”
Ms Rowell says this under-development of retirement income products is a missed opportunity for the wealth management industry.
“The sector could be doing more to demonstrate its valuable contribution to solving the retirement puzzle by offering high quality financial products now and into the future,” she said.
But equally important, providers should also think carefully about creating products that will achieve the right objectives for consumers.
“What APRA wants to avoid is a repeat of some of the legacy issues we have spent years trying to fix or eradicate, especially in life insurance,” she says.