The concept of retirement has evolved significantly over time. Originally viewed as a point when one stops full-time work, it is now seen as a phase of life lasting decades. This is due to substantial increases in life expectancy and time spent in good health after age 65. While Australians intend to retire around age 65 on average, many actually retire earlier, often for involuntary reasons like health issues. Looking ahead, retirement will likely involve multiple phases of work, learning, volunteering and leisure. Individuals and societies will need to adapt to support longer retirements.
This document summarizes a white paper from the Actuaries Institute on retirement incomes in Australia. Key findings include:
1. The superannuation system is generally doing what it was designed to do but will not deliver a comfortable retirement for all.
2. The least wealthy sections will continue to rely entirely on the Age Pension for a modest lifestyle. Younger cohorts will be marginally better off.
3. The average taxpayer subsidy via the Age Pension will reduce for future retirees due to the Superannuation Guarantee. This will partly offset rising costs of the Age Pension.
This document discusses the challenge of managing longevity risk in retirement. As lifespans increase, individuals face greater risk of outliving their retirement savings. This risk is exacerbated by the shift from defined benefit to defined contribution pension plans, placing more responsibility on individuals. There are five principles for developing policy on defined contribution decumulation: adequacy, information, flexibility, equity, and sustainability. Providing appropriate default options and lifetime income guarantees can help ensure retirement savings last throughout one's lifetime.
Australia has a three-pillar retirement system consisting of a universal age pension, compulsory employer superannuation contributions, and voluntary contributions. The superannuation system is large at over $1.8 trillion AUD but most assets are in defined contribution accounts that may provide an inadequate level of retirement income. The system has wide coverage due to mandatory contributions but faces challenges in providing sufficient retirement incomes and transitioning to post-retirement financial products. Improving outcomes will require cooperation between the government, regulators, and pension industry.
The document discusses options for accessing home equity to help meet retirement needs. It notes that housing wealth represents a significant store of value for many retirees that is currently underutilized. It proposes several policy reforms to facilitate greater access to home equity, such as partial protection from the Age Pension means test for amounts released from equity and reviewing regulations around private equity release schemes. The goal is to give retirees more flexibility to use their housing wealth to fund living expenses and aged care costs in order to improve standards of living in retirement.
The document discusses how increased choice in UK pension benefits has created behavioral complications for members. It examines potential behaviors people may exhibit given more freedom over how they access pension funds. While choice is welcomed, there is concern that too much could overwhelm people and reduce optimal outcomes. The key question is how much choice is dangerous and how can its effects be managed. The document suggests employers understand member behaviors to plan accordingly and provide support through engagement programs to help people make informed retirement decisions.
Why don’t people buy lifetime annuity products if they help them be more confident in retirement? That’s the annuity puzzle! 🤨
Stephen Huppert has written a white paper exploring the annuity puzzle and some of the research looking for solutions
NATIONAL FORUM JOURNALS are a group of national and international refereed, blind-reviewed academic journals. NFJ publishes articles academic intellectual diversity, multicultural issues, management, business, administration, issues focusing on colleges, universities, and schools, all aspects of schooling, special education, counseling and addiction, international issues of education, organizational behavior, theory and development, and much more. DR. WILLIAM ALLAN KRITSONIS is Editor-in-Chief (Since 1982). See: www.nationalforum.com
20150921 PPI State Street myths and rules of thumb in retirement incomeSarah Luheshi
This document summarizes research on how "rules of thumb" could help individuals manage their defined contribution pension pots under the new UK pension flexibilities. It discusses two potential rules of thumb - the "4% rule" where individuals withdraw 4% of their pot annually adjusted for inflation, and securing a "basic income to meet essential needs." The research found that while received wisdom may be true for some, rules of thumb phrased in clear, easy to understand language could help guide retirement income decisions for many by addressing risks like drawing down pensions too quickly. Financial education is still needed to ensure rules of thumb benefit individuals.
This document summarizes a white paper from the Actuaries Institute on retirement incomes in Australia. Key findings include:
1. The superannuation system is generally doing what it was designed to do but will not deliver a comfortable retirement for all.
2. The least wealthy sections will continue to rely entirely on the Age Pension for a modest lifestyle. Younger cohorts will be marginally better off.
3. The average taxpayer subsidy via the Age Pension will reduce for future retirees due to the Superannuation Guarantee. This will partly offset rising costs of the Age Pension.
This document discusses the challenge of managing longevity risk in retirement. As lifespans increase, individuals face greater risk of outliving their retirement savings. This risk is exacerbated by the shift from defined benefit to defined contribution pension plans, placing more responsibility on individuals. There are five principles for developing policy on defined contribution decumulation: adequacy, information, flexibility, equity, and sustainability. Providing appropriate default options and lifetime income guarantees can help ensure retirement savings last throughout one's lifetime.
Australia has a three-pillar retirement system consisting of a universal age pension, compulsory employer superannuation contributions, and voluntary contributions. The superannuation system is large at over $1.8 trillion AUD but most assets are in defined contribution accounts that may provide an inadequate level of retirement income. The system has wide coverage due to mandatory contributions but faces challenges in providing sufficient retirement incomes and transitioning to post-retirement financial products. Improving outcomes will require cooperation between the government, regulators, and pension industry.
The document discusses options for accessing home equity to help meet retirement needs. It notes that housing wealth represents a significant store of value for many retirees that is currently underutilized. It proposes several policy reforms to facilitate greater access to home equity, such as partial protection from the Age Pension means test for amounts released from equity and reviewing regulations around private equity release schemes. The goal is to give retirees more flexibility to use their housing wealth to fund living expenses and aged care costs in order to improve standards of living in retirement.
The document discusses how increased choice in UK pension benefits has created behavioral complications for members. It examines potential behaviors people may exhibit given more freedom over how they access pension funds. While choice is welcomed, there is concern that too much could overwhelm people and reduce optimal outcomes. The key question is how much choice is dangerous and how can its effects be managed. The document suggests employers understand member behaviors to plan accordingly and provide support through engagement programs to help people make informed retirement decisions.
Why don’t people buy lifetime annuity products if they help them be more confident in retirement? That’s the annuity puzzle! 🤨
Stephen Huppert has written a white paper exploring the annuity puzzle and some of the research looking for solutions
NATIONAL FORUM JOURNALS are a group of national and international refereed, blind-reviewed academic journals. NFJ publishes articles academic intellectual diversity, multicultural issues, management, business, administration, issues focusing on colleges, universities, and schools, all aspects of schooling, special education, counseling and addiction, international issues of education, organizational behavior, theory and development, and much more. DR. WILLIAM ALLAN KRITSONIS is Editor-in-Chief (Since 1982). See: www.nationalforum.com
20150921 PPI State Street myths and rules of thumb in retirement incomeSarah Luheshi
This document summarizes research on how "rules of thumb" could help individuals manage their defined contribution pension pots under the new UK pension flexibilities. It discusses two potential rules of thumb - the "4% rule" where individuals withdraw 4% of their pot annually adjusted for inflation, and securing a "basic income to meet essential needs." The research found that while received wisdom may be true for some, rules of thumb phrased in clear, easy to understand language could help guide retirement income decisions for many by addressing risks like drawing down pensions too quickly. Financial education is still needed to ensure rules of thumb benefit individuals.
Aegon Fact Sheet Flexible Retirement in the NetherlandsAegon
The Netherlands has a pension system based on collectivity and solidarity. Defined benefit pensions raise issues of sustainability. The 2010 Pensions Accord enabled adjustments to accommodate more flexible retirement ages in government and employer pensions by capping benefits and shifting longevity risk to individuals. There has been a shift toward more flexible collective defined contribution plans. The government retirement age is increasing to 66-67 by 2021. Recent changes also make it easier for older workers to remain employed longer but also make it easier for employers to dismiss older employees. Incentives are needed to encourage retaining older workers.
The document provides an introduction to retirement planning basics. It discusses why individuals need to take retirement planning into their own hands given uncertainties around social security and pension benefits. It also notes the need to plan for unforeseen medical expenses in retirement and potential estate planning goals. The document outlines key factors to consider when determining how much money is needed for retirement, including desired retirement age, expected annual income needs, current savings, expected investment returns, and any pension benefits.
The document discusses the growing retirement assets of baby boomers and the opportunity this presents for financial professionals. It notes that pre-retirees aged 55-64 currently possess 25% of US investable assets and are more open to advice than retirees. As the baby boom generation reaches retirement, over $1 trillion per year is expected to move from pensions to other retirement accounts. Financial professionals need to position themselves as retirement planning experts to attract these assets. The document promotes a program from Dreyfus that provides education, tools and resources to help financial professionals serve pre-retiree and retiree clients and their transition to retirement.
Retirement Reimagined: Longevity and the Future of Financial Well-BeingCognizant
As life expectancies grow, banks and insurers need to deliver products and services that provide people with financial security throughout their extended sunset years. Here’s how the financial services industry can remain relevant and vital as life journeys elongate and grow more fluid.
Aegon Fact Sheet Flexible Retirement in CanadaAegon
Canada has implemented policies since the 1990s to promote more flexible and transitional retirements. These policies were driven by labor shortages due to falling birth rates and the need to keep experienced employees in the workforce longer. The Canada Pension Plan removed mandatory retirement provisions to provide flexibility. Additionally, the rising costs of pensions are leading to reforms like increasing the eligibility age for Old Age Security benefits from 65 to 67 starting in 2023. However, questions remain about whether employers can adapt to an aging workforce and align private and public pension plans. Survey data shows most Canadian workers envision a flexible retirement transition but there are gaps in retraining opportunities from employers.
Reimagining Retirement: Longevity and the Future of Financial ServicesCognizant
As life expectancies grow, here's how banks and insurers can deliver products and services that provide people with financial
security throughout their extended sunset years.
Milliman Paper - bespoke solutions is new blackandyshep
This document discusses retirement planning challenges in light of upcoming pension reforms in the UK. It identifies four key risks retirees face - longevity, inflation, lack of flexibility, and volatility. Existing retirement products may not adequately address these risks. The reforms shift responsibility and risk from the government to individuals. The document proposes a 'bucketing' framework to help advisers create customized retirement portfolios that blend products to better meet clients' financial and emotional needs by addressing the four risks.
Retirement Preparations in a New Age of Self-EmploymentAegon
The self-employed have a flexible vision of retirement. They plan on working past traditional retirement age, easing into retirement, and fully retiring at an older age. The Aegon Retirement Readiness Survey 2016
Retirement Issues and Concerns in the 21st Century copyBert Salazar
This document discusses the challenges of retirement planning in the 21st century. It addresses issues like increased longevity, rising healthcare costs, lack of pensions, and other factors that erode retirement savings. Solutions are proposed to help mitigate these obstacles, like using insurance or annuity products that provide long term care benefits without losing money if care isn't needed. Overall it outlines the major risks Americans now face in retirement planning and some potential ways to reduce those risks.
The article discusses three approaches to measuring retirement benefit adequacy: replacement ratios, minimum needs measures, and cash flow analysis. It summarizes a Society of Actuaries study that used a simulation model to analyze how different factors like income, wealth, health risks, and retirement decisions impact retiree welfare. Key findings include that many retirees may see a drop in standard of living, delaying retirement significantly improves adequacy, health and long-term care risks can derail plans more than investment risk, and employers should consider shock events in benefits design and offer education resources.
Essential Fiduciary Training Webinar | Full Slide Deck | Rea & AssociatesRea & Associates
This webinar covers various topics related to retirement plans and fiduciary responsibilities. It includes presentations on defining retirement success, the importance of a prudent fiduciary process, and a case law update on fiduciary duty. The first presentation discusses defining goals for retirement and strategies to achieve retirement security. The second presentation outlines the fiduciary process, including formalizing policies and monitoring service providers. The third presentation reviews examples from case law where fiduciaries failed to meet their responsibilities and the resulting consequences. The webinar aims to provide fiduciaries with information to maintain compliance and effectively manage retirement plans.
This document discusses private retirement savings in the United States. It begins by outlining the current state of retirement savings, noting that about 20% of Americans do not save and that Social Security is projected to run out of funds. The document then defines key terms like retirement, retirement savings, private savings, and sufficient savings. It estimates that individuals will need around $500,000-$1,000,000 in savings to retire comfortably. The document analyzes factors like taxes, debt, and human behavior that influence private savings, and says the three main economic perspectives will be considered to evaluate solutions to increasing retirement savings.
Aegon Fact Sheet Flexible Retirement in AustraliaAegon
Australia has many programs that support flexible retirement, including increasing the retirement age and providing tax incentives to work longer. The government allows older workers to earn income from pensions while working. There are also incentives for part-time or casual work after retirement age. Workers can transition to part-time work while withdrawing retirement funds in a tax-favored way. About 20% of Australians over 55 have participated in this transition program. In a survey, 70% of Australians envision a flexible retirement, and most employers support options for part-time work after retirement age.
Aviva is improving its annuity offering as part of its calls to industry within the Rethinking Retirement Report 2013, by extending its guarantees and offering an increased value protection period.
Aviva first published Rethinking Retirement in the UK in 2011 to highlight the financial challenges facing retirees and set out a series of changes it believed were vital to help them. These included a call for the industry to publish annuity rates. Since the report’s launch, the industry has taken note and we have seen it take great strides forward through new developments such as the Association of British Insurers’ (ABI) Code of Conduct.
The past 30 years has born witness to the collapse of the private pension system with for-profit employers, tax-exempt entities and now the governmental sponsors replacing defined benefit pension programs with defined contribution plans. This practice spawned a well-documented transfer of investment and funding risk from employer to employee. Now, most defined contribution plans render the employee the sole decision maker on the four factors that determine an employee's ability to retire successfully: contribution rate, investment strategy/return, time horizon, and spending needs in retirement.<br /><br /> In this presentation we will address what employers can do to help employees meet the demands of the new retirement plan era.
This document discusses barriers that prevent many Americans from adequately preparing for retirement. It summarizes the key findings of a survey of nearly 4,500 consumers conducted by Deloitte's Center for Financial Services. The survey found that 58% of Americans do not have a formal retirement savings and income plan. It identified five main barriers: 1) conflicting financial priorities, 2) failure of financial institutions to effectively communicate, 3) lack of awareness of retirement products, 4) mistrust of financial institutions, and 5) consumers' preference to manage retirement planning themselves. The document suggests that financial institutions should address retirement needs earlier and in conjunction with other financial goals in order to help consumers overcome these barriers.
Implications of public pension enhancement in CanadaAlex Mazer
Common Wealth co-founder Alex Mazer's presentation on the Ontario Retirement Pension Plan and Canada Pension Plan enhancement to SHARE's Toronto Pension and Investment Governance Course on May 6, 2016.
This document discusses retirement readiness challenges and opportunities for plan sponsors and employees. A key point is that 32 million Americans may never be ready to retire due to challenges in saving enough. The document outlines retirement trends, the impact of financial stress on employees and employers, and strategies plan sponsors can adopt to help improve participant outcomes, such as providing retirement readiness assessments and financial wellness programs.
It is paramount that retirement income systems and the advisers, trustees and other fiduciaries responsible for their management strike a fine balance between individual freedom and subtle nudges or paternalistic interventions.
Aegon Fact Sheet Flexible Retirement in the NetherlandsAegon
The Netherlands has a pension system based on collectivity and solidarity. Defined benefit pensions raise issues of sustainability. The 2010 Pensions Accord enabled adjustments to accommodate more flexible retirement ages in government and employer pensions by capping benefits and shifting longevity risk to individuals. There has been a shift toward more flexible collective defined contribution plans. The government retirement age is increasing to 66-67 by 2021. Recent changes also make it easier for older workers to remain employed longer but also make it easier for employers to dismiss older employees. Incentives are needed to encourage retaining older workers.
The document provides an introduction to retirement planning basics. It discusses why individuals need to take retirement planning into their own hands given uncertainties around social security and pension benefits. It also notes the need to plan for unforeseen medical expenses in retirement and potential estate planning goals. The document outlines key factors to consider when determining how much money is needed for retirement, including desired retirement age, expected annual income needs, current savings, expected investment returns, and any pension benefits.
The document discusses the growing retirement assets of baby boomers and the opportunity this presents for financial professionals. It notes that pre-retirees aged 55-64 currently possess 25% of US investable assets and are more open to advice than retirees. As the baby boom generation reaches retirement, over $1 trillion per year is expected to move from pensions to other retirement accounts. Financial professionals need to position themselves as retirement planning experts to attract these assets. The document promotes a program from Dreyfus that provides education, tools and resources to help financial professionals serve pre-retiree and retiree clients and their transition to retirement.
Retirement Reimagined: Longevity and the Future of Financial Well-BeingCognizant
As life expectancies grow, banks and insurers need to deliver products and services that provide people with financial security throughout their extended sunset years. Here’s how the financial services industry can remain relevant and vital as life journeys elongate and grow more fluid.
Aegon Fact Sheet Flexible Retirement in CanadaAegon
Canada has implemented policies since the 1990s to promote more flexible and transitional retirements. These policies were driven by labor shortages due to falling birth rates and the need to keep experienced employees in the workforce longer. The Canada Pension Plan removed mandatory retirement provisions to provide flexibility. Additionally, the rising costs of pensions are leading to reforms like increasing the eligibility age for Old Age Security benefits from 65 to 67 starting in 2023. However, questions remain about whether employers can adapt to an aging workforce and align private and public pension plans. Survey data shows most Canadian workers envision a flexible retirement transition but there are gaps in retraining opportunities from employers.
Reimagining Retirement: Longevity and the Future of Financial ServicesCognizant
As life expectancies grow, here's how banks and insurers can deliver products and services that provide people with financial
security throughout their extended sunset years.
Milliman Paper - bespoke solutions is new blackandyshep
This document discusses retirement planning challenges in light of upcoming pension reforms in the UK. It identifies four key risks retirees face - longevity, inflation, lack of flexibility, and volatility. Existing retirement products may not adequately address these risks. The reforms shift responsibility and risk from the government to individuals. The document proposes a 'bucketing' framework to help advisers create customized retirement portfolios that blend products to better meet clients' financial and emotional needs by addressing the four risks.
Retirement Preparations in a New Age of Self-EmploymentAegon
The self-employed have a flexible vision of retirement. They plan on working past traditional retirement age, easing into retirement, and fully retiring at an older age. The Aegon Retirement Readiness Survey 2016
Retirement Issues and Concerns in the 21st Century copyBert Salazar
This document discusses the challenges of retirement planning in the 21st century. It addresses issues like increased longevity, rising healthcare costs, lack of pensions, and other factors that erode retirement savings. Solutions are proposed to help mitigate these obstacles, like using insurance or annuity products that provide long term care benefits without losing money if care isn't needed. Overall it outlines the major risks Americans now face in retirement planning and some potential ways to reduce those risks.
The article discusses three approaches to measuring retirement benefit adequacy: replacement ratios, minimum needs measures, and cash flow analysis. It summarizes a Society of Actuaries study that used a simulation model to analyze how different factors like income, wealth, health risks, and retirement decisions impact retiree welfare. Key findings include that many retirees may see a drop in standard of living, delaying retirement significantly improves adequacy, health and long-term care risks can derail plans more than investment risk, and employers should consider shock events in benefits design and offer education resources.
Essential Fiduciary Training Webinar | Full Slide Deck | Rea & AssociatesRea & Associates
This webinar covers various topics related to retirement plans and fiduciary responsibilities. It includes presentations on defining retirement success, the importance of a prudent fiduciary process, and a case law update on fiduciary duty. The first presentation discusses defining goals for retirement and strategies to achieve retirement security. The second presentation outlines the fiduciary process, including formalizing policies and monitoring service providers. The third presentation reviews examples from case law where fiduciaries failed to meet their responsibilities and the resulting consequences. The webinar aims to provide fiduciaries with information to maintain compliance and effectively manage retirement plans.
This document discusses private retirement savings in the United States. It begins by outlining the current state of retirement savings, noting that about 20% of Americans do not save and that Social Security is projected to run out of funds. The document then defines key terms like retirement, retirement savings, private savings, and sufficient savings. It estimates that individuals will need around $500,000-$1,000,000 in savings to retire comfortably. The document analyzes factors like taxes, debt, and human behavior that influence private savings, and says the three main economic perspectives will be considered to evaluate solutions to increasing retirement savings.
Aegon Fact Sheet Flexible Retirement in AustraliaAegon
Australia has many programs that support flexible retirement, including increasing the retirement age and providing tax incentives to work longer. The government allows older workers to earn income from pensions while working. There are also incentives for part-time or casual work after retirement age. Workers can transition to part-time work while withdrawing retirement funds in a tax-favored way. About 20% of Australians over 55 have participated in this transition program. In a survey, 70% of Australians envision a flexible retirement, and most employers support options for part-time work after retirement age.
Aviva is improving its annuity offering as part of its calls to industry within the Rethinking Retirement Report 2013, by extending its guarantees and offering an increased value protection period.
Aviva first published Rethinking Retirement in the UK in 2011 to highlight the financial challenges facing retirees and set out a series of changes it believed were vital to help them. These included a call for the industry to publish annuity rates. Since the report’s launch, the industry has taken note and we have seen it take great strides forward through new developments such as the Association of British Insurers’ (ABI) Code of Conduct.
The past 30 years has born witness to the collapse of the private pension system with for-profit employers, tax-exempt entities and now the governmental sponsors replacing defined benefit pension programs with defined contribution plans. This practice spawned a well-documented transfer of investment and funding risk from employer to employee. Now, most defined contribution plans render the employee the sole decision maker on the four factors that determine an employee's ability to retire successfully: contribution rate, investment strategy/return, time horizon, and spending needs in retirement.<br /><br /> In this presentation we will address what employers can do to help employees meet the demands of the new retirement plan era.
This document discusses barriers that prevent many Americans from adequately preparing for retirement. It summarizes the key findings of a survey of nearly 4,500 consumers conducted by Deloitte's Center for Financial Services. The survey found that 58% of Americans do not have a formal retirement savings and income plan. It identified five main barriers: 1) conflicting financial priorities, 2) failure of financial institutions to effectively communicate, 3) lack of awareness of retirement products, 4) mistrust of financial institutions, and 5) consumers' preference to manage retirement planning themselves. The document suggests that financial institutions should address retirement needs earlier and in conjunction with other financial goals in order to help consumers overcome these barriers.
Implications of public pension enhancement in CanadaAlex Mazer
Common Wealth co-founder Alex Mazer's presentation on the Ontario Retirement Pension Plan and Canada Pension Plan enhancement to SHARE's Toronto Pension and Investment Governance Course on May 6, 2016.
This document discusses retirement readiness challenges and opportunities for plan sponsors and employees. A key point is that 32 million Americans may never be ready to retire due to challenges in saving enough. The document outlines retirement trends, the impact of financial stress on employees and employers, and strategies plan sponsors can adopt to help improve participant outcomes, such as providing retirement readiness assessments and financial wellness programs.
It is paramount that retirement income systems and the advisers, trustees and other fiduciaries responsible for their management strike a fine balance between individual freedom and subtle nudges or paternalistic interventions.
Similar to retirement-matters (Stephen Huppert's take on Australian's attitudes to later life) (20)
The document outlines guidance for connecting pension schemes to the UK's new pensions dashboards programme, including a connection deadline of 31 October 2026 and staging timetable for large and medium schemes to connect between 2025-2026. It discusses establishing connection standards and user testing for 2024 launches. Several industry groups are collaborating on the programme to ensure individuals can access their pension information securely online through the dashboards. Providers are encouraged to prepare for legal obligations, data, and their method of connection.
The document summarizes a report from Aon on the state of UK defined contribution pensions. It notes that:
1) Retirement living standards set by the Pensions and Lifetime Savings Association increased significantly, requiring higher expenditures in retirement.
2) As a result, Aon's UK DC Pension Tracker, which measures expected retirement incomes, fell sharply over the quarter with savers further from a comfortable standard of living.
3) The Pension Tracker has now returned to levels from 2020, suggesting retirement savings have not improved in the last three years for most savers.
Con Keating's coffee morning presentation.pptxHenry Tapper
The document compares asset and liability estimates from different sources including TPR, ONS, and PPF over time. Key findings include:
- ONS estimates of total assets are consistently lower than TPR and PPF estimates
- TPR estimates funding ratios are higher than ONS estimates, implying fewer schemes in deficit
- Discrepancies could be due to differences in discount rates and methodology between sources
- The accuracy of estimates has implications for assessing the costs of new pension regulations to sponsors
JD ED Strategy Policy and Analysis. TPrpdfHenry Tapper
The Executive Director of Strategy, Policy & Analysis at the Pensions Regulator is responsible for developing the regulatory framework to enable market innovation while protecting savers. The role involves leading strategy, policy, economics, risk management, and data analysis functions. As a member of the Executive Committee and Board, the Director also provides leadership across the organization and engagement with external stakeholders. Key responsibilities include developing strategic plans, policies, and regulatory solutions; overseeing research, risk analysis, and market insights; and driving organizational change and performance.
2024-3-29 - PR Newswire - Federal Judge Says BP Must Reform its Pension Plan.pdfHenry Tapper
A group of retirees from Standard Oil of Ohio (Sohio) filed a lawsuit against BP in 2016 alleging that BP had misled them about changes made to their pension benefits in 1989. After an eight year legal battle, a federal judge recently ruled in favor of the retirees, finding that BP had committed fraud and violated federal law regarding employee retirement benefits. The ruling could potentially impact around 7,000 former BP employees. The judge ordered BP to provide equitable relief to remedy the situation, and the case will now move to a next phase to determine what actions BP must take. The retirees and their attorneys view this as an important victory that upholds protections for workers' retirement benefits.
Press release from the BP Pensioner Group on the WPC DB reportHenry Tapper
The Work and Pensions Committee report calls for changes to the proposed regulatory approach for defined benefit pension schemes in order to ensure their long-term viability. While their numbers have declined in recent years, defined benefit schemes remain important for savers and the economy. However, two decades of cautious regulation have led to low-risk investment approaches that threaten the sustainability of remaining open schemes. The report recommends allowing more flexibility in investments and funding to take advantage of improved funding levels and prevent premature closure of open schemes. It also calls for improved governance standards and legislation to support pension consolidation to strengthen defined benefit pensions for the future.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
New Visa Rules for Tourists and Students in Thailand | Amit Kakkar Easy VisaAmit Kakkar
Discover essential details about Thailand's recent visa policy changes, tailored for tourists and students. Amit Kakkar Easy Visa provides a comprehensive overview of new requirements, application processes, and tips to ensure a smooth transition for all travelers.
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
Our presentation delves into Dogecoin's potential future, exploring whether it's destined to skyrocket to the moon or face a downward spiral. In addition, it highlights invaluable insights. Don't miss out on this opportunity to enhance your crypto understanding!
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Confirmation of Payee (CoP) is a vital security measure adopted by financial institutions and payment service providers. Its core purpose is to confirm that the recipient’s name matches the information provided by the sender during a banking transaction, ensuring that funds are transferred to the correct payment account.
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3. ACTUARIES INSTITUTE • RETIREMENT MATTERS 2
1 Executive Summary 3
2 The Concept of Retirement 5
2.1 The Evolution of Retirement 6
2.2 Retirement Intentions Versus Reality 8
2.3 The Nature of Retirement 9
2.4 The Future of Retirement 9
3 Retirement Risks and Challenges 11
4 From Retirement Saving to
Retirement Funding 14
4.1 Maturing Superannuation System 15
4.2 Beyond Three Pillars 16
5 Retirement Planning: The Need
for Help, Guidance and Advice 17
5.1. The Current System is Complex 18
5.2 The Gap Between Demand and Supply 19
5.3 Some Thoughts for Moving Forward 20
6 Beyond the Financial 21
6.1. Holistic Retirement Planning 23
6.2 Health Trumps Wealth 23
6.3 Purpose, Meaning and Relationships 23
7 Conclusion 25
7.1 Longevity, Ageing and Retirement 26
7.2 Retirement Funding and Planning 26
7.3 Retirement Reimagined 27
References and Recommended Reading 28
Contents
5. 4
ACTUARIES INSTITUTE • RETIREMENT MATTERS
“The changing nature
of retirement will
bring opportunities,
challenges and risks
to individuals and
society.
Since the concept emerged in the late nineteenth century,
retirement has evolved from a point in time to a short period
before death to a multi-phased time of renewal, reinvention
and discovery.
The main drivers of change have been lengthening life spans
and health spans and, with that, changing expectations for
life after full-time work. Many people will choose not to follow
conventional retirement patterns, and the economy and
business must adapt, including valuing mature workers. Some
people have even observed that the word “retirement” may
have certain unfortunate connotations and that we should
consider retiring the word “retirement”!
The changing nature of retirement will bring opportunities,
challenges and risks to individuals and society. The key
retirement risk for individuals is longevity risk—the fear of
outliving their money. This fear results in many retirees living
much more frugally than is required.
There is frequent reference to Australia having a Three Pillar
Retirement Income System. To support longer retirements,
we must expand that framework to include additional pillars
such as work options post full-time work and accessing
income from equity in the family home (or other property), for
those who have such assets.
The retirement income system—including its interaction with
other systems, such as tax and aged care—is complex and
challenging to navigate. This challenge is compounded by
low levels of financial literacy. People need Help, Guidance
and Advice (HGA) for both the transition to retirement and
in life after full-time work. However, it’s hard to get, and it’s
challenging to access at an affordable price.
Our concerns include:
• The large gap between the demand for HGA and its
availability—partly due to too much regulatory-driven
complexity, both for financial advisers and superannuation
funds/trustees.
• Uncertainty regarding how advice regulation will be
amended following the Quality of Advice Review and
whether these changes will make a difference.
• The challenge for financial services institutions to offer
help and guidance to complement more regulated
personal advice.
The things that matter in retirement include financial,
physical and mental health, and a sense of purpose and
identity. Individuals would benefit from a broader and more
holistic approach to retirement planning that considers all
these factors.
It is paradoxical that when planning retirement and making
decisions about when to retire, financial considerations
typically take centre stage, whereas, after the event, it is
more likely that non-financial considerations dictate whether
one has a good retirement (underpinned by financials,
of course).
Consequently, the non-financial considerations merit much
more extensive attention in public policy, media commentary,
retirement transition planning, and managing wellbeing
in retirement.
In this Dialogue Paper, we don’t give definitive solutions
because there are none. However, in Section 7, we suggest
questions for consideration by employers, governments
and superannuation trustees. More work is required to
better prepare individuals and societies for the plausible
futures ahead.
Our aim for this paper is to provoke conversations about
the evolving nature of retirement and how actuaries and
others can help society be better prepared for the future of
retirement. A good starting point is to ask the question: what
does Retirement Reimagined really look like?
7. 6
ACTUARIES INSTITUTE • RETIREMENT MATTERS
2.1 The Evolution of Retirement
Australians’ interest in the concept of retirement is growing. According to Google
Trends (n.d.), searches for the term “retirement” have increased by over 80% in the
last decade (see Figure 1).
Figure 1: Searches on “retirement” in Australia1
0
20
40
60
80
100
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Google Trends
This growing interest is hardly surprising. There are now more than 4 million
Australian retirees, and another 670,000 people intend to retire in the next five years
(ABS, 2023b).
The concept of retirement is a relatively recent one in the history of humanity. Many
trace it to the German Chancellor Otto von Bismarck. In 1881, he announced that
anyone over 70 years old would be forced to retire and that he would pay a pension
to them. The retirement age in Germany was reduced to 65 during World War I
(Laskow, 2015).
Most dictionaries give two definitions for retirement, which are variations of:
1. retirement is the time when a worker retires
2. a person’s retirement is the period in their life after they have retired
The first is a point in time; the second is a period of time.
For much of the twentieth century, retirement as a point in time was the more
pervasive of the two, with the term post-retirement used to describe the few short
years following that point. This use is consistent with the etymology of the term: the
French verb retirer, meaning to leave or to withdraw, and the suffix -ment is used to
form nouns from verbs, the noun being the result of the action (Online Etymology
Dictionary, n.d.).
During Bismarck’s time, the life expectancy at birth in Germany was
37.7 years for men and 41.4 years for women, though he died in 1889 at the
age of 83 (von Herbay, 2013). Similarly, when the Australian Government
introduced an Age Pension in 1908 with a qualifying age (pension age)
of 65, barely half of Australians were expected to reach pension
age—life expectancy at birth was 55.2 years for men and 58.8 years
for women. At Federation in 1901, only 4% of the population was
over 65 (National Museum of Australia, n.d.). The pension age for
women was reduced to 60 in 1910 because women generally became
“incapacitated for regular work at an earlier age than men” (Kewley,
1973, as cited in Treasury, 2001). This change was made despite women
having higher life expectancy. The eligibility age for women remained at
60 until 1 July 1995, when it started increasing by six months every two
years until reaching 65 on 1 July 2013 (Callaghan et al., 2020).
“There are
now more than
4 million
Australian
retirees.
1
The y-axis is relative popularity. Google Trends data for a search is presented on a scale of 0 to 100, with 100 representing the highest search interest for
the selected time and location. In this case, the highest search interest for the term “retirement” in Australia was in July 2023.
8. 7
ACTUARIES INSTITUTE • RETIREMENT MATTERS
Life expectancy at age 65 has increased significantly to
85.3 years for males and 88.0 years for females (ABS, 2022),
with 17% of the population over 65 (ABS 2023a). The pension
age only recently increased from 65 to 67 (Services Australia,
2023b).
The two ages guiding discussions about retirement in
Australia are when individuals become eligible to start
drawing on their superannuation and when they are eligible
to receive the Age Pension. As we have seen, the pension
age only recently increased to 67, and Australians can
access their superannuation when they turn 65, regardless
of whether they have retired or are still working, or earlier in
certain circumstances (ATO, n.d.-a).
Life expectancy at birth provides an indication as to the
numbers reaching retirement. Life expectancy at age 65
is the length of time Australians can expect to spend in
retirement.
As life expectancy at age 65 has increased (AIHW, 2022),
retirement has come to refer to a period of time rather than
a point in time, and the term post-retirement is used less
and less. Some might say that post-retirement is death (see
Figure 2).
Figure 2: Life expectancy at age 65
75
77
79
81
83
85
87
89
1985–1987
Males Females
1995–1997 1999–2001 2003–2005 2007–2009 2011–2013 2015–2017 2019–2021
Source: Australian Institute of Health and Welfare
KPMG (2022) estimates that over the past 40 years, men
have seen an 8-year increase in the expected length of
retirement, while women have seen a 3.5-year increase. While
the time spent in retirement is increasing, so is the time spent
in both good health and ill health in retirement (AIHW, 2022).
Figure 3: Health-adjusted life expectancy at age 65
20
10
0
30
40
50
60
70
80
90
100 Males
2003 2011
Full health Ill health
2015 2018 2022
Females
78.4 79.4 79.8 80.1 80.3
4.4 4.7 4.8 4.8 5.0
20
10
0
30
40
50
60
70
80
90
100
2003 2011
Full health Ill health
2015 2018 2022
80.7 81.3 81.5 81.6 81.8
5.4 5.7 5.8 6 6.2
Source: Australian Institute of Health and Welfare, Australian Burden of
Disease Study 2022
Retirement is no longer a point in time but rather a new
phase of life—in other words, retirement is the journey rather
than the destination. Considerations include how to spend
the additional years of good health and how to fund the
additional years of ill health.
9. 8
ACTUARIES INSTITUTE • RETIREMENT MATTERS
2.2 Retirement Intentions Versus
Reality
The relationship between retirement and social security
that started with Bismarck is an important one and has a
significant influence on when Australians retire.
For many, the age of 65 becomes a target age to start
retirement, even though there is no legislated or fixed age
in Australia, as in many countries. On average, Australians
intend to retire at 65.5 years (ABS, 2023b).
While retirement intentions have remained around 65 for
some time, many retirees retire earlier than planned. In 2020,
140,000 Australians retired, bringing the total number of
retirees to 4.1 million. For these 4.1 million, the average age
at the start of their retirement was 56.3 years. The actual age
when people are retiring is increasing. For those who retired
in 2020, the average start of retirement age had increased to
64.3 years, with women tending to retire one to three years
earlier than men, on average (see Figure 4) (ABS, 2023).
Financial security is the main factor influencing when
Australians plan to retire (see Table 1).
Table 1: Top four factors influencing decision about when to retire
Factors Median
Financial security 38%
Personal health or physical abilities 22%
Reaching the eligibility age for an age (or service)
pension
14%
Ability to access superannuation funds 4%
Source: ABS, Retirement and Retirement Intentions, Australia, 2020-21
The actual reasons reported for retirement are quite different.
Of those who retired in the last 20 years, 27% of these
retirements were involuntary. Reasons include:
• lost last job for economic reasons (retrenched)
• own sickness, injury or disability
• to care for an ill, disabled, or elderly person
While things don’t always go to plan, we should heed Dwight
D. Eisenhower, who said, “Plans are worthless, but planning is
everything”.
Figure 4: Average age when starting retirement by year, 2020-21
0
50
Retirees
(’000)
Retirees (’000)
Average
age
when
starting
retirement
(years)
Average age when starting retirement (years)
100
150
200
250
300
0
20
10
30
40
50
60
70
2000 2002 2004 2006 2008 2010 2012 2016 2018 2020
2014
Source: ABS, Retirement and Retirement Intentions, Australia, 2020-21
10. 9
ACTUARIES INSTITUTE • RETIREMENT MATTERS
2.3 The Nature of Retirement
In Section 2.1, we looked at the transition of retirement from
a point in time to a period of time. The nature of this period of
retirement is also evolving from a period of withdrawal and
decline to one of renewal, engagement, meaningful pursuits,
and personal growth.
Other changes in the nature of retirement are taking place.
The boundary between full-time work and retirement is
not always a sharp dividing line, as phased retirement is
becoming more attractive for individuals and employers. This
phased retirement might include a bridge job or part-time
employment. Sometimes retiring from one job leads to a
whole new career, sometimes called an “encore career”.
Nor is it a one-way street. Between 2019 and 2022, more
than 179,000 Australians over 55 re-joined the workforce
(ABC, 2023). This phenomenon is referred to as unretirement.
For some, the return to work has been for financial reasons.
Others soon realise that “the three Gs approach – golf,
gardening and grandparenting — [are] not for everyone”
(ABC, 2023). The tight labour market in Australia has
facilitated unretirement.
As the period of time in retirement increases, it is becoming
more important to consider different phases of retirement.
It is common to refer to three phases using a range of terms,
including:
• the Active Years, the Passive Years, and the Twilight Years
• the Independent Phase, the Decline Phase, and the
Dependent Phase
• the Go-Go Years, the Slow-Go Years, and the No-Go Years
2.4 The Future of Retirement
On 30 June 2020, there were an estimated 4.2 million older
Australians (aged 65 and over), with older people comprising
16% of the total Australian population (ABS, 2020b). The
Intergenerational Report 2023 (IGR) (Commonwealth of
Australia, 2023) projects the number of people aged 65 and
over will more than double by 2062-63, and those aged 85
and over will more than triple (see Figure 5).
Little wonder the IGR identifies population ageing as one of
the powerful forces that will continue to shape Australia’s
economy over the coming decades, including the future of
retirement.
Figure 5: Australian Population Age structures, 2022–23 &
2062–63
25-29
20-24
15-19
10-14
5-9
0-4
30-35
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85+
2022-23
Males Females
0% 3%
2%
1% 4% 5%
3%
4%
5% 2% 1%
25-29
20-24
15-19
10-14
5-9
0-4
30-35
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85+
2062-63
Males Females
0% 3%
2%
1% 4% 5%
3%
4%
5% 2% 1%
Source: Intergenerational Report 2023
11. 10
ACTUARIES INSTITUTE • RETIREMENT MATTERS
The phases of life have changed over time, influenced by a
range of factors, including increases in life span and changes
in education, the economy and technology. For example, the
concept of the teenager emerged at the end of the 1950s and
came into its own in the 1960s (Thompson, 2018).
Similarly, new ways of thinking about life after full-time work
are emerging, changing the very nature of retirement.
In the past few years, we have seen a flurry of articles calling
for a rebranding of retirement or even to retire retirement.
Here are a few of the expressions we have come across:
• rethinking retirement
• reinventing retirement
• retiring retirement
• reframing retirement
• redesigning retirement
• Life 2.0, Life Two
• the fourth quarter
• elderhood
At the 2007 Actuaries Institute Biennial Convention, Darren
Wickham (2007) called for abolishing retirement. One of his
reasons was that retirement based on a fixed age does not
make sense. Wickham proposed the following:
“Consider the following thought
experiment – imagine life
expectancy (at birth) increasing
significantly – say, to 110 – as
a result of medical advances
(for example, due to effective
treatments for major diseases
such as cancer). What age would
you choose as the minimum to be
eligible for a social security age
pension?
Why would you choose that age?
Some proportion of Life
Expectancy? An average age
of the onset of disability?
He concluded that setting a fixed retirement age is an entirely
arbitrary decision, just like the decision to use age 65.
As we saw in Section 2.1, this arbitrary age has increased
modestly while life expectancy has increased significantly,
and we expect it to continue increasing. Millions of dollars
are being spent on longevity science (Deloitte, 2021), and
more and more researchers are optimistic about success
(Willingham, 2021). In 2021, The New York Times asked, “Can
we live to 200?” and looked at a range of innovations that
might make that possible (St. Fleur et al., 2021). Imagine what
that would do to the concept of retirement!
One of the outcomes of longevity science is an increased
understanding of the difference between biological and
chronological ages.
Moshe Milevsky (2019) suggests retirement planning
should be based on biological age, which refers to how old
your cells and tissues are based on physiological evidence.
He says, “Your true age is not the number of years you’ve
circled the sun”.
The concept of biological age versus chronological age
should not be a surprise. Many will be familiar with the saying
“60 is the new 40”. A recent report on the State of the Older
Nation by the Council of the Ageing (COTA, 2023) reported
that nearly 70% of Australians over 50 feel younger than their
age, and they felt, on average, 7.7 years younger!
We may not be basing pension age on biological age anytime
soon. However, whether we abolish or simply rebrand
retirement, as our understanding of the ageing process
improves and life spans grow, the concept of retirement will
continue to change.
13. 12
ACTUARIES INSTITUTE • RETIREMENT MATTERS
As retirement evolves, so do the risks for individuals in achieving a good retirement.
Achieving a good retirement requires planning, and retirement planning is complex
with plenty of uncertainty—from deciding when to leave full-time work to wondering
what our future lifespan will be and whether we will have enough funds to last the
distance.
Given these uncertainties, retirement planning done properly is an exercise in
risk management. The Retirement Income Covenant (Superannuation Industry
(Supervision) Act 1993 (Cth) s 52(8A) and s 52AA) recognises this. It requires
superannuation fund trustees to have a retirement income strategy that sets out how
they will assist their members in managing the risks to the sustainability and stability
of their retirement income.
Trustees are required to assist their members in balancing this risk management
objective with another two:
• to maximise expected retirement income over the period of retirement; and
• to have flexible access to expected funds over the period of retirement.
Based in the United States, the Society of Actuaries (SOA) has conducted biennial
studies on potential risks faced by Americans in retirement and published a
Retirement Risk Chart for many years. While plenty of articles list retirement risks,
the SOA takes an actuarial approach and includes commentary on the risks, how
they might be managed and related planning issues. Some risks can be planned
for; others might be unexpected. Table 2 shows the 13 risks identified in the 2020
Retirement Risk Chart (SOA, 2020) in three broad categories.
Table 2: Retirement Risk Chart
Economic Risks
Personal Planning
Considerations
Unexpected (or
Unpredictable) Events
• Inflation
• Interest Rates
• Financial Markets
• Employer Solvency
• Longevity
• Post-Retirement
Employment
• Changes in Housing and
Support Needs
• Death of Spouse or
Partner
• Divorce or Separation in
Retirement
• Public Policy Changes
• Significant Health Care
Needs
• Unforeseen Needs of
Family Members
• Bad Advice, Fraud or
Theft
“Achieving a
good retirement
requires
planning
14. 13
ACTUARIES INSTITUTE • RETIREMENT MATTERS
Even this list is not exhaustive. Kevin Gaines (n.d.) lists 18
retirement risks, and we are sure you can come up with more.
The list of risks can be overwhelming for retirees. Retirement
planning expert Wade Pfau (2014) suggests focusing on the
primary financial objective of maintaining a suitable standard
of living for the remainder of one’s life and then treating
longevity as the fundamental risk facing retirees.
Although longevity is a good thing for an individual, longevity
risk is the mother of all retirement risks. The longer one
lives, the more exposed one is to all the other associated
retirement risks.
An essential step in any effective risk management process
is prioritising the risks. Wenliang Hou (2022) looked at how
well retirees assess the risks they face in retirement and
concluded that there is “a big disconnect between how actual
and perceived risks are ranked.”
Hou rated longevity as the most significant risk, followed
by health risk. However, retirees perceive market risk
as the most important, highest-ranking risk due to their
exaggeration of market volatility. Retirees rated longevity risk
and health risk lower in the subjective ranking than in the
objective ranking because retirees underestimate their life
spans and their health costs in late life.
These results are not surprising given the findings of
Yakoboski et al. (2013) that US adults demonstrate a lack of
longevity literacy and that “this matters because longevity
literacy is associated with retirement readiness”. Both
National Seniors Australia (2014) and YourLifeChoices
(2023) report that Australians also tend to underestimate life
expectancy.
Self-perceptions and attitudes really do matter, and a key
issue for society is addressing attitudes towards people
becoming older. Society has been rightly tackling racism
and sexism; it is high time that there is an active debate
and strong focus on the next ‘-ism’ – i.e., ageism. Attitudes
towards and treatment of our more mature citizens have a
material impact on the wellbeing of “mature” citizens and
collective societal wellbeing.
“Although longevity is
a good thing for an
individual, longevity
risk is the mother of all
retirement risks.
15. 14
ACTUARIES INSTITUTE • RETIREMENT MATTERS 14
4.From Retirement
Saving to
Retirement Funding
ACTUARIES INSTITUTE • RETIREMENT MATTERS
16. 15
ACTUARIES INSTITUTE • RETIREMENT MATTERS
For decades, the Australian retirement income system
was the Age Pension. As we saw in Section 2.1, Bismarck
introduced the concept of government providing funding
for retirees, and in 1908, the Australian Government did
likewise. While some Australians were fortunate to benefit
from occupational superannuation schemes since the
mid-nineteenth century (The Treasury, 2001), it was not until
1992 that the introduction of the Superannuation Guarantee
(SG) extended coverage to almost all employees.
That was the birth of Australia’s three-pillar retirement
income system, with each pillar representing a source of
retirement income:
1. a publicly provided means-tested Age Pension
2. mandatory private superannuation savings
3. voluntary savings (including voluntary superannuation
savings)
As the population ages, some worry about the government’s
ability to afford to continue to pay the Age Pension in its
current form (Herborn, 2021). However, as noted in Section
4.1, this worry is probably unfounded. Some might recall the
short-lived proposal in the 2014 Federal Budget to increase
the pension age to 70 years by 2035 (Hockey, 2014). Recently,
Professor Hanlin Shang (cited in Chantiri, 2023) called for the
pension age to be raised to age 70 by the year 2050.
However, we should consider the overall cost of the
retirement income system as a whole. As well as
spending on the Age Pension, this also includes the two
main superannuation tax expenditures: concessions on
contributions and earnings.
4.1 Maturing Superannuation System
The SG rate is scheduled to be 12% from 1 July 2025 (ATO, n.d.-b), and more Australians will be retiring with the benefit of higher
SG contributions for their full working life. As the superannuation system matures, the importance of superannuation as a source
of retirement income will increase, reducing the reliance on the Age Pension. The IGR projected the proportion of the population
over pension age not receiving any pension to increase from 28.6% in 2022-23 to 43.2% in 2062-63 (Commonwealth of Australia,
2023).
The total annual cost of Australia’s retirement income system is projected to remain relatively steady over the next 40 years, at
around 4.0 to 4.5% of GDP (see Figure 6).
Figure 6: Fiscal impact of the retirement income system
0
1
%
of
GDP
2
3
4
5
2022–23 2032–33 2042–43 2052–53 2062–63
Age Pension expenditure
Contributions tax concessions
Earnings tax concessions
Source: Intergenerational Report 2023
17. 16
ACTUARIES INSTITUTE • RETIREMENT MATTERS
It is nearly 10 years since the Financial System Inquiry Final
Report recommended the Australian Government set a clear
objective for the superannuation system to provide income in
retirement (Murray et al., 2014). After much consultation and
a failed attempt at legislation in 2016, the Government has
recently released an exposure draft to legislate the objective
of superannuation as “to preserve savings to deliver income
for a dignified retirement, alongside government support,
in an equitable and sustainable way” (Superannuation
(Objective) Bill 2023 Exposure Draft, 2023).
As the superannuation system matures, more Australians see
superannuation as their primary source of retirement funding
(ABS, 2023b). Many trustees are now acknowledging that
they have predominately focused on the accumulation phase,
to the detriment of retirees (Wootton, 2023). In response
to this lack of focus on retirees, two of Australia’s largest
superannuation funds now have Chief Retirement Officers
representing retirees at the C-suite (ART, 2023; Klijn, 2022).
Currently, the dominant retirement product is the account-
based pension, which is a drawdown product rather than
a true pension product. One of the key observations of the
Retirement Income Review (RIR) was the need for more
efficient use of savings in retirement and that “greater
innovation is needed to deliver retirement incomes that meet
retirees’ needs” (Callaghan, 2020). The industry has started
to respond with the launch of several innovative retirement
income products in recent years (Allianz Retire+, n.d.; AMP,
n.d.; ART, n.d.; Challenger, n.d.; Generation Life, n.d.). We look
forward to this trend continuing—a broad range of retirement
income solutions are needed to meet the range of different
requirements.
To complement these products, we must provide retirees with
accessible and affordable Help, Guidance and Advice (see
Section 5).
4.2 Beyond Three Pillars
In the same way the retirement income system increased
from one pillar to three pillars to adapt to changing
conditions, it needs to keep evolving.
Several submissions to the RIR (Callaghan et al., 2020) said
there were more than three pillars in Australia’s retirement
income system. Additional pillars include work, equity
release, non-financial arrangements such as pensioner
discounts, other government payments, and inheritances.
These are all sources of income that people may be able to
draw on in their retirement.
We should no longer talk about a three-pillar retirement
income system. It is time to give more voice to additional
sources of retirement income, such as home equity and part-
time work, providing an additional two pillars.
Accessing equity in the home was one of the options listed
in the RIR for boosting retirement outcomes (Callaghan et
al., 2020). It observed that “For most retirees, the family
home is their main asset. Using relatively small portions of
home equity can substantially improve retirement incomes.”
As well as introducing a new source of retirement funding,
there is the added benefit of potentially staying in familiar
surroundings (both home and neighbourhood) for longer.
As well as commercial providers of equity release products,
the Federal Government, in recognition of the importance
of home equity, also runs a scheme that allows senior
Australians to supplement their retirement income by
accessing the equity in their home through a government
loan (Services Australia, 2023a).
The Institute’s public policy position on home equity supports
measures that allow retirees to keep their home but access
the equity to boost retirement incomes effectively, whilst
acknowledging that the home provides significant financial
and emotional benefits to retirees (Actuaries Institute, 2021).
It is important to note that, while levels of home ownership
are strong for current retirees (AIHW, 2023) (see Figure 7),
home ownership rates have been falling for several decades
for those of pre-retirement age (Commonwealth of Australia,
2023). The retirement planning needs for retirees who
do not own their own home are very different. There is a
high rate of poverty amongst retirees who are renters. The
Institute’s public policy position supports measures that aim
to improve the retirement outcomes of retiree renters, such
as significantly increasing the rate of Commonwealth Rent
Assistance (Actuaries Institute, 2021).
Figure 7: Home ownership by age group
70%
60%
50%
80%
90%
50-54 55-59
Age Group
60-64 65-69 70-74
Source: Australian Institute of Health and Welfare, Home ownership and
housing tenure
As we discussed in Section 2.4, a phased retirement is
becoming more popular. One of the reasons for maintaining
some part-time work is to supplement retirement funding
from the other pillars. The Federal Government recently
announced changes to allow pensioners to earn more from
work before their Age Pension is affected, broadening their
choices and increasing flexibility (Chalmers et al., 2023).
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ACTUARIES INSTITUTE • RETIREMENT MATTERS 17
5. Retirement Planning:
The Need for Help,
Guidance and Advice
ACTUARIES INSTITUTE • RETIREMENT MATTERS
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
5.1 The Current System is Complex
The RIR (Callaghan et al., 2020) said that “the retirement
income system is complex”. Add that complexity to the risks
we looked at in Section 3, and it is no wonder that Investment
Trends research found that only 37% of non-retirees felt
prepared for retirement (as cited in Jones, 2023).
It is as if we expect individuals to become experts in risk
management — maybe even become their own defined
benefit actuary!
The big challenge for individuals is effectively transitioning
into retirement, including efficiently converting their
retirement savings into retirement income. Alexis George,
CEO of AMP, says: “We’re financially illiterate when it comes
to retirement and the financial solutions available to us”
(George, 2023).
Complications include:
• the need to optimise the use of their assets and access
social security;
• how to best navigate health care and, ultimately, aged care;
• the uncertainty of future lifespan and whether their money
will last; and
• the disruption and emotional stress that can often be
associated with retirement relate to both financial and non-
financial issues.
The RIR (Callaghan et al., 2020) noted that:
“Complexity and uncertainty, a lack
of financial advice and guidance,
and low levels of financial
literacy are impeding people
from understanding the system.
As a result, some people fail to
adequately plan for retirement and
make poor decisions about how
to use their savings in retirement.
How can we better support individuals with their transition
from full-time work? With a combination of timely and
targeted Help, Guidance and Advice (HGA).
Financial advice plays a significant role in preparing
individuals for retirement (Lockyer, 2022; Rice Warner, 2002).
However, “many don’t seek advice because they are put
off by factors such as high costs, significant distrust of the
industry and a perception that financial advice is only for the
wealthy” (ASIC, 2019).
The Corporations Act 2001 (Corporations Act 2001 (Cth)
Chapter 7) governs financial services, including financial
product advice, and defines the concepts of personal and
general advice (Sect 766B). General financial advice does not
consider people’s personal circumstances, but there is some
ambiguity on the boundaries of general advice.
Recognising the challenges Australians face accessing
quality, affordable advice, the Federal Government initiated
the Quality of Advice Review (QAR) in 2022 (Hume, 2022).
The Government released the final report publicly in
February 2023 (Levy, 2023). In its response to the QAR
(Australian Government, 2023), the Government has agreed
to 14 of the 22 QAR recommendations and indicated that it
will progress the package of reforms in three streams:
1. reducing red tape;
2. the role of super funds and expanding intra fund advice;
and
3. allowing other forms of advice, such as those not provided
by a financial adviser with a good advice duty, and the role
of other financial institutions.
Suffice it to say, there is still significant uncertainty because
the Government won’t look to articulate a clear position
until 2024, and any policies will be subject to more public
consultation.
Implementing the QAR recommendations would significantly
expand the scope of personal advice and reduce general
advice to a more confined set of circumstances.
However, it is not only financial advice in the narrow,
legislative sense that would help those approaching
retirement. They also need targeted guidance and help. While
many acknowledge this need, providers are challenged by
the requirements of the Corporations Act 2001. Guidance
and help are not well-defined.
The RIR (Callaghan et al., 2020) frequently refers to the role
of information, advice and guidance. In most cases, it also
tends to bracket together advice and guidance. Advice can
include guidance, but it should also be possible to provide
guidance in defined circumstances without the burden of
regulatory obligations that accompany advice.
It says guidance is “advice or assistance provided to people
that does not relate to a financial product recommendation”
and suggests examples of guidance could include
assistance on:
• The best age to retire
• Their Age Pension entitlements
• Their financial position and debts and assets
• How and when to pay down debt
• Their likely future living expenses
• Their retirement income needs (Callaghan et al., 2020).
Other guidance examples could include thinking about
retirement goals, budgeting and cash flow planning, and
considering utilising home equity as a source of income
(without getting into financial/product advice).
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
“Help” includes assistance with information and where or
how to access other sources of knowledge or insight that
could assist with the recipient’s discovery process. Examples
include:
• provision of factual information
• where to go to for guidance, if not advice – and a source
you can trust
• suggested areas for further research – e.g. valuable
websites
• useful questionnaires, tools and templates to aid
“self-discovery”
• facilitating introductions to advice providers
5.2 The Gap Between Demand
and Supply
A great deal has been written on the gap between the
demand and availability of financial advice. In 2021,
Investment Trends estimated that “61% per cent of
consumers had ‘unmet’ advice needs with only 16% per cent
having seen a financial adviser in the last 12 months” (cited in
Callaghan et al., 2020).
Less is said about the demand and availability of Help and
Guidance.
Some QAR recommendations risk categorising nearly all
one-to-one interactions between superannuation funds and
members as personal financial advice based on presumed
knowledge. This compounds the challenge of identifying
when simple guidance approaches would be helpful.
Fundamental to expanding the availability of advice, let alone
the help and guidance components, is streamlining advice
processes for financial advisers without compromising
quality and expanding advice through superannuation funds.
Trustees currently face a conundrum: on the one hand,
they are obliged by the Retirement Income Covenant to
have a strategy that “identifies and recognises the broad
retirement income needs of the members of the fund; and
presents a plan to build the RSE’s capacity and capability to
service those needs” (Explanatory Memorandum, Corporate
Collective Investment Vehicle Framework and Other
Measures Bill, 2021). On the other hand, they must navigate
the dangerous waters of personal advice obligations.
The interaction between the Retirement Income Covenant
and the changes in financial advice regulation arising from
the QAR is essential. The QAR has the potential to improve
access to advice, specifically for advice related to retirement
planning. Recommendation 6 is that “Superannuation fund
trustees should be able to provide personal advice to their
members about their interests in the fund, including when
they are transitioning to retirement” (Levy, 2023).
The QAR views all advice to members as personal advice in
the following circumstances: “the provider of the advice has
considered one or more of the person’s objectives, financial
situation and needs” (Levy, 2023). If these recommendations
are accepted and legislated, it is likely that the vast majority
of advice provided by superannuation funds and one-to-one
interactions with members, including intra-fund advice, would
be classified as personal advice and subject to the QAR
“good advice” recommendations.
General advice will tend to be limited to other than one-
to-one interaction between funds/trustees and members.
As noted by the QAR, “Research reports, seminars and
newsletters that are not individualised – directed to
individual clients or adjusted or otherwise personalised for
individual clients – will continue to be general advice” (Levy,
2023, p. 65). Other examples may include websites.
For personal advice, the QAR recommends a shift from
a prescribed “best interests” advice standard (with safe
harbour steps) to a “good advice” standard and a fiduciary
best interests duty for financial advisers. But what is “good
advice”? The QAR suggests that it is “fit for purpose” and has
the “usual consumer protections”. However, this is arguably
ill-defined, subjective and untested (in courts). The apparent
caution by many superannuation trustees regarding the QAR
advice recommendations is understandable if most advice
is deemed personal and a “good advice” standard is not
yet defined.
An issue for both the Retirement Income Covenant and
the QAR is the challenge for trustees to know enough
about their members. Trustees only have a limited window
into their member’s financial affairs and other important
considerations such as home ownership arrangements
and marital status. Furthermore, where a member is in a
relationship, retirement planning is best done as a couple,
and, as Wayne Swan, Chair of Cbus and former Treasurer,
said at the recent AFR Wealth Summit, “We need to have a
situation where we can provide financial advice to couples,
but you can’t do that at the moment. [Plus] the social security
system works on couples” (Wootton & Read, 2023). This
requires further work.
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
5.3 Some Thoughts for Moving Forward
The future of Help, Guidance and Advice is a big discussion
and outside the primary scope of this Dialogue Paper;
however, here are a few ideas to get the ball rolling:
• Develop a well-defined HGA Framework. Actuary Michael
Rice AO recommends matching regulatory requirements
with the risk from the consumer’s perspective—for
example, with requirements varying depending on whether
personal advice is Simple (low risk), Comprehensive
(medium risk) or Complex (high risk) (Rice, 2022). The aim
of this framework should be to expand the supply of HGA,
making it easier for consumers to obtain the support they
need, when they need it, and in a format that makes sense
to them. The RIR contends, “While guidance of this nature
is unlikely to fall with the definition of regulated financial
advice, the definition of what constitutes financial advice
is not always clear, and this ambiguity may explain funds’
reluctance to offer guidance” (Callaghan et al., 2020).
• Address barriers to superannuation funds knowing more
about their members. Many trustees are reluctant to collect
too much data from members directly due to concerns
they may inadvertently be providing personal financial
advice (APRA & ASIC, 2023). In addition, trustees and
members have privacy and information security concerns
that must be addressed. Surely, it should be in members’
best financial interests for trustees to know as much as
possible about their members to provide the best support
possible as they make the difficult transition to retirement.
• Consider innovative regulatory approaches to expand the
use of digital tools and technologies. While HGA offerings
will always require a hybrid approach, we see the role of
tools and technologies continuing to evolve, often involving
triaging or providing initial guidance and advice before
passing the consumer on to a personal advice provider,
according to their needs and preferences. There is also
a role for tools and technologies to support the personal
advice provider.
• Be bold with advice reforms, including finding a new home
for financial advice legislation. “This new home would allow
a reformed structure and framing to be implemented, less
burdened by the drafting styles and ad hoc legislative
design choices of the past” (Filkin & Ash, 2011).
We acknowledge that these initiatives are not straightforward
and not without risks requiring careful management.
The environment is constantly changing, and the demand for
retirement planning support is growing. The time to act
is now.
“Surely, it should be in
members’ best financial
interests for trustees to
know as much as possible
about their members
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
6.Beyond the Financial
21
ACTUARIES INSTITUTE • RETIREMENT MATTERS
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
One of the paradoxes of retirement planning is that when planning retirement
and making decisions about when to retire, it is typically financial considerations
that take centre stage, whereas, after the event, it is more likely that non-financial
considerations dictate whether one has a good retirement (underpinned by
financials, of course).
These non-financial considerations merit much more extensive attention in public
policy, media commentary, retirement transition planning, and managing wellbeing
in retirement.
Traditionally, commentary on retirement matters has been dominated by financial
considerations, which are, of course, important. We are seeing a growing realisation
that a whole host of non-financial considerations are arguably at least as important
and, in aggregate, more important than financial considerations (Hayes, 2022; Stone,
n.d.; Vigue, 2023).
For many retirees, life after full-time work is very fulfilling based on a naturally found
balance of travel, leisure, family and friends, volunteering, community involvement,
sports activities, etc. These people have got it sorted. For others, it can be a
disruptive experience and a source of stress.
As well as losing our regular income, we potentially lose much more when we leave
the workplace, including identity, purpose, structure, community, relevance and, for
some, power. Without adequate planning and preparation, retirement can potentially
be a disruptive and challenging experience with a significant detrimental impact on
one’s mental health.
This planning and preparation for retirement — or, as we prefer to call it, “life after
full-time work” — on a holistic basis can better assure wellbeing in “life after full-
time work”.
“it is more
likely that
non-financial
considerations
dictate whether
one has a good
retirement
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
6.1 Holistic Retirement Planning
The critical elements of a successful retirement include
financial, physical and mental health, along with a sense of
purpose and identity. Any successful retirement planning
approach needs to consider the whole person and not just
the financial elements.
These non-financial considerations are not just “nice-
to-have considerations” and “add-ons” to the retirement
planning process. Those approaching retirement will benefit
significantly from an integrated or holistic approach to
retirement planning that covers both financial and non-
financial dimensions.
One such useful framework is the Changing Gears Life Stage
Planning ModelTM
(Figure 8).2
Changing Gears has been
applying this model for over 15 years to raise awareness and
understanding of the issues to address in transitioning to
retirement.
Figure 8: Changing Gears Life Stage Planning ModelTM
Financial Cons
i
d
e
r
a
t
i
o
n
s
W
o
r
k
&
T
r
a
n
s
i
t
i
o
n
Life After Work
Your
Plan
Health &
Move
Work
Mental
Wellbeing
Values &
Purpose
Social
Recreation
Family &
Housing
Learning
Finances
Source: Changing Gears
Other frameworks that emphasise the importance of a multi-
dimensional and holistic approach include work by AgeWave
and Edward Jones, which uses the four dimensions of health,
family, purpose and finances (AgeWave, 2021) and the
Victorian Government’s Better Health Channel (Department
of Health & Human Services, n.d.), which addresses post-
work lifestyle, financial issues and retirement, emotional
issues and retirement, and partner issues and retirement and
stresses that planning can help create a happy retirement.
6.2 Health Trumps Wealth
A significant component of the non-financial dimension in
retirement planning must be planning around good health. As
we have seen, the period of retirement is continuing to grow,
and maybe it is helpful to talk about “rest-of-life” planning or
longevity planning.
Numerous studies have concluded that health is more
important than wealth for retirees, including:
• “Retirees in better health experience greater feelings
of wellbeing, including feeling more financially secure”
(MassMutual, 2015); and
• According to an AgeWave study, “81% of retirees cite
health as the most important ingredient to a happy
retirement… being financially secure was a distant second
at 58%” (McWhinnie, 2014).
Any considerations of health need to cover both physical
and mental health. Retirement from full-time work can be
a disruptive and difficult experience. It can be a time of
emotional adjustment, and stress is not uncommon and may
even manifest in retirement depression. This can partly arise
from the abrupt change to a sense of purpose and social
relationships derived from work and work relationships.
Robinson and Smith (n.d.) noted, “While retiring can be a
reward for years of hard work, it can also trigger stress,
anxiety, and depression… tips can help you cope with the
challenges, find new purpose, and thrive in your retirement.”
6.3 Purpose, Meaning and
Relationships
Meaning and purpose have a pivotal role to play in a
successful life after full-time work. A major longitudinal study
by Trinity College, Dublin highlights the role of maintaining
a healthy attitude as we age. Professor Rose Anne Kenny
says, “We control 80% of our ageing biology” (Kenny, 2023).
Kenny’s research is complementary to the views of Moshe
Milevsky, quoted in Section 2.4, highlighting the need to think
about “biological age” vs. “chronological age”.
Some of these phenomena are explained by epigenetics,
which is the study of how your behaviours, attitudes and
environment impact the functioning of your genes. Many
epigenetic changes are reversible and, hence, manageable
(Dutchen, 2023).
Much has been written on the value of living life with a sense
of meaning and its influence on wellbeing. This knowledge is
especially important for retirement planning when our sense
of meaning and purpose may have been strongly affiliated
with the workplace. Many have adopted the philosophy of
Aristotle, who believed that happiness derives from living
a life of meaning and that, conversely, “happiness is the
meaning and purpose of life”. That is, they are mutually
reinforcing.
2
Subject to trademark by Changing Gears and reproduced here with the permission of Changing Gears. The authors are exploring potential initiatives in the
retirement sector with several organisations, including Changing Gears. There is currently no commercial arrangement with any of these organisations.
25. 24
ACTUARIES INSTITUTE • RETIREMENT MATTERS
Many will be familiar with the writings and thoughts of the
eminent psychiatrist Dr Viktor Frankl and his book Man’s
Search for Meaning (1946). He founded logotherapy, the
central tenet of which is that the search for a life’s meaning is
the central human motivational force.
A vital step in preparing for life after full-time work, or
managing wellbeing in this stage of life, is identifying
and fulfilling this meaning and purpose. This will vary by
individual and may include community involvement, serving
a not-for-profit organisation with a worthwhile purpose,
contributing to the growth and development of others (e.g.
through mentoring), pursuing further education and learning,
family commitments and involvement, religious or spiritual
commitments, and so on.
“Having a purpose in life has been cited consistently as an
indicator of healthy aging for several reasons, including its
potential for reducing mortality risk” (Hill & Turiano, 2014).
Relationships rank at least as important as purpose and
meaning. One of the most well-known studies into happiness
is the Harvard Study of Adult Development (Solan, 2017). Its
conclusion? “Positive relationships keep us happier, healthier,
and help us live longer” (Schulz & Waldinger, 2023).
Not only do relationships make us happier but the lack
of relationships or loneliness can have quite detrimental
impacts on our physical health. “The risk of premature death
associated with social isolation and loneliness is similar to
the risk of premature death associated with well-known risk
factors such as obesity” (Holt-Lunstad et al., 2015).
Failing to consider purpose, meaning and relationships can
harm mental and physical health in retirement. “A common
mistake in planning for retirement is not considering the
emotional adjustment that occurs, which, in some cases, can
cause depression” (Waichler, 2023).
“Unfortunately, all too many depressed older adults fail to
recognize the symptoms of depression or don’t take the
steps to get the help they need” (Robinson et al., n.d.).
Waichler (2023) also suggests a range of tips to manage this
transition, including gradually transitioning out of full-time
work (if one has that option), volunteering, preparation in
advance, preparing your finances, and destigmatising age
(i.e. having a positive attitude to ageing and the impacts of
epigenetics).
While some superannuation fund trustees are concerned
about a potential conflict between the Member Best Financial
Interest Duty and the types of support they can provide to
members about their retirement (Hennington et al., 2023),
we are pleased to see some trustees are providing guidance
on non-financial aspects on their websites (ART, n.d.; Aware
Super, n.d.). We encourage more to do so.
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
7. Conclusion
25
ACTUARIES INSTITUTE • RETIREMENT MATTERS
27. 26
ACTUARIES INSTITUTE • RETIREMENT MATTERS
Retirement matters. It is something each and every one of us
has had to deal with or will have to deal with at some point in
our lives.
The social, technological, employment and demographic
trends shaping the future of retirement are not going to
slow down. Every aspect of society will need to adapt to the
evolving nature of retirement—to deal with the challenges
and take advantage of the opportunities. We have addressed
only some in this Dialogue Paper.
• For employers: how to manage an older workforce,
including workforce planning?
• For government: where to set the Age Pension age, how to
shape and manage retirement funding as their population
ages, and how to regulate the superannuation and advice
sectors to facilitate Help, Guidance and Advice?
• For superannuation trustees: how to best serve members
approaching retirement, at the start of retirement, and
in retirement within the parameters of regulatory and
prudential requirements?
Many of these issues deserve their own Dialogue Paper, and
we are sure you can name others not covered. For those
who want to delve deeper into the issues, we have included
a comprehensive reference list containing not just those
sources we have cited but a broad range of further reading
on the topics we discuss.
Without being exhaustive, here are a few areas we see as
good places to start.
7.1 Longevity, Ageing and Retirement
Increasing longevity and redefining retirement are
heavily entwined. Given the large amounts being spent
on significantly reducing ageing, we expect lifespans to
continue to grow and retirement to continue to evolve.
Many people would love to extend their working lives beyond
conventional retirement ages—either in a full-time or part-
time capacity. Likewise, society and the national economy
would benefit from extended work patterns. Businesses and
other organisations would also benefit from more workers
with experience, insights and wisdom.
A major obstacle to address is societal attitudes and
stereotypes. We are progressing on some of the “-isms”
such as racism, sexism, and, potentially, ableism. However,
outgoing age discrimination commissioner Kay Patterson
(2023) states, “Ageism is the least-challenged and
understood form of discrimination”.
There are issues to be addressed by a range of different
stakeholders, including:
• Government and public policy makers: consider public
policy changes to encourage redefining retirement. Do
we need a National Longevity Strategy (Williams, n.d.) to
complement the Intergenerational Reports?
• Businesses and other organisations: consider the changes
required to fully appreciate mature workers. Is ageing part
of your Diversity and Inclusiveness agenda?
• Superannuation funds: consider treating your retiring
and retired members as more than just a retention
opportunity. Profit-to-member Trustee Boards typically
include representatives of employees, that is, members
in the accumulation phase—is there a place for retiree
representation?
7.2 Retirement Funding and Planning
As retirement continues to evolve, so must retirement funding
and retirement planning.
Let’s stop talking about Australia’s three-pillar system and
change the conversation so that extended work patterns
(Pillar 4) and home equity (Pillar 5) are given appropriate
standing. We raise some of the questions regarding Pillar 4
above. What public policy settings are required to encourage
Pillar 5? It is about time that superannuation funds and
financial planners include these pillars in retirement planning
conversations, where appropriate.
A different way to think about retirement planning is to
consider the question posed by Joseph Coughlin (2018):
“Who teaches you how to live in retirement?”
Keep that question in mind when considering:
• How do we help trustees manage the best financial
interests duty and balance the tension between their
Retirement Income Covenant obligations and how financial
advice is regulated?
• How do we enable a more holistic approach to retirement
planning, covering both financial and non-financial
dimensions?
We call for a well-defined HGA Framework that trustees
can manage and that enables retirees to readily access the
Help, Guidance and Advice they need, when they need it, in a
format that makes sense.
Is it time to be bold with advice reforms, including finding
a new home for financial advice legislation rather than the
complexity of the Corporations Act 2001 advice provisions?
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ACTUARIES INSTITUTE • RETIREMENT MATTERS
7.3 Retirement Reimagined
Sixty years ago, President John F. Kennedy said, “It is not
enough for a great nation merely to have added new years
to life — our objective must also be to add new life to those
years” (Kennedy, 1963).
That call to action is even more relevant today. It all comes
back to the individual and understanding how they view
retirement. Only then can we improve our ability to serve
them in a way that helps them each achieve what’s most
important to them and their families.
Retirement is an important life transition and brings new
possibilities and new questions. We have shown that any
conversation about retirement needs to look beyond the
traditional focus on products and solutions. This is true for
parts of society — governments, businesses/organisations,
and individuals.
Our aim for this paper is to provoke conversations about
the evolving nature of retirement and how actuaries and
others can help society be better prepared for the future of
retirement. A good starting point is to ask the question: what
does Retirement Reimagined really look like?
“What does
Retirement Reimagined
really look like?
29. References and Recommended Reading
Actuaries Institute. (2021). Public Policy Statement. Securing
Adequate Retirement Incomes for an Ageing Australia –
Supporting Statement. https://actuaries.logicaldoc.cloud/
download-ticket?ticketId=e75b99d7-50fb-49b1-9551-
fe549e70dfe8
Age Wave. (2021). The Four Pillars of the New Retirement:
What a Difference a Year Makes. https://agewave.com/what-
we-do/landmark-research-and-consulting/research-studies/
four-pillars-of-the-new-retirement/
Allianz Retire+ (n.d.). Allianz Guaranteed Income for Life.
https://www.allianzretireplus.com.au/solutions/agile/
overview.html
AMP (n.d.). MyNorth Pension. https://www.northonline.com.
au/client/mynorth-pension
Atchley, R. C. (1976). The sociology of retirement. John Wiley
& Sons.
Australian Bureau of Statistics (ABS). (2022). Life tables, 2019
– 2021. https://www.abs.gov.au/statistics/people/population/
life-expectancy/2019-2021
Australian Bureau of Statistics (ABS). (2023a). National, state
and territory population, December 2022. https://www.abs.
gov.au/statistics/people/population/national-state-and-
territory-population/dec-2022
Australian Bureau of Statistics (ABS). (2023b). Retirement and
Retirement Intentions, Australia, 2020-21. https://www.abs.
gov.au/statistics/labour/employment-and-unemployment/
retirement-and-retirement-intentions-australia/latest-release
Australian Government. (2023). Government response to the
quality of Advice Review. https://treasury.gov.au/publication/
p2023-407255
Australian Human Rights Commission (AHRC). (2021). What’s
age got to do with it?. https://humanrights.gov.au/our-work/
age-discrimination/publications/whats-age-got-do-it-2021
Australian Institute of Health and Welfare (AIHW). (2022).
Australian Burden of Disease Study 2022. https://www.aihw.
gov.au/reports/burden-of-disease/australian-burden-of-
disease-study-2022/contents/summary
Australian Institute of Health and Welfare (AIHW). (2023).
Home ownership and housing tenure. https://www.aihw.gov.
au/reports/australias-welfare/home-ownership-and-housing-
tenure
Australian Prudential Regulation Authority (APRA) & Australian
Securities and Investments Commission (ASIC). (2023).
Information Report – Implementation of the retirement
income covenant: Findings from the APRA and ASIC
thematic review. https://www.apra.gov.au/information-report-
implementation-of-retirement-income-covenant-findings-
from-joint-apra-and-asic
Australian Retirement Trust (ART). (2023, June 21). Australian
Retirement Trust appoints industry veteran to Chief of
Retirement. https://www.australianretirementtrust.com.au/
newsroom/art-appoints-chief-of-retirement
Australian Retirement Trust (ART). (n.d.-a). Mental health at
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