It’s absolutely vital that people will have future access to specific retirement advice, says the CEO of the Association of Superannuation Funds Australia (ASFA) in response signalled changes to the age pension.
Pauline Vamos would like to see the development of a special accreditation that advisers who wish to provide age advice would be required to have.
“The current standards are the minimum. It’s time for the government, the regulators, and the industry to come together and say, ‘how can we ensure the right qualifications are developed in this market?’” she told Wealth Professional
Vamos’ comments come in response to Treasurer Joe Hockey’s recent speech in Washington DC that signalled that the Australian Government is considering raising the retirement age and cracking down on the eligibility for the age pension.
Over the next decade spending on the age pension was predicted to increase by close to 70% due to the ageing population.
“The IMF fiscal report released just a few hours ago identified that Australia’s increased healthcare and pension spending alone, based on current settings, would mean an extra $93bn of government spending per annum by 2030,” Hockey said. “That is the equivalent of an extra $61bn a year in today’s dollars, or the equivalent of an extra 4% of today’s GDP. To pay for the growth in health and pension expenditure, the government would need to raise the equivalent of the existing company tax.”
And he has confirmed that the pension age could rise to as much as 70, reported the Sydney Morning Herald
Vamos said that the potential rise is a difficult conversation but one that needs to take place because the current system isn’t sustainable as people are now living much longer.
What we need to do to prepare is make sure older workers will have access to further training, job flexibility, support, and career counselling, she said.
“We don’t want people having to start up their own company just to work. A lot of people do retire because they have access to the age pension so there’s no doubt that money is a driver, but then a lot of people keep busy and go into volunteer work. I haven’t seen any research which really looks at the number of people working at age 60 – we do know there is age discrimination which is something we need to fix.”
An in-depth impact assessment of the consequences of raising the age pension needs to be undertaken so we can alleviate any potential ramifications in advance, she said.
Financial advisers should also start building in a flexible risk management plan into their advice structure because the whole nature of retirement funding is going to change. They should focus on helping people get the best out of superannuation by consolidating accounts, looking at income streams, and reviewing insurance regularly.
“It’s absolutely vital that age advice or retirement advice is very specific – these are big financial discussions,” Vamos said. “What we’d like to see a focus on is developing special accreditation for those providing specialised [age] advice. This is something that should be led by the financial services industry. It’s about time that in terms of standards we don’t wait for regulators: we do it ourselves.”