Paul Keating says super funds must make the move from being overweight in equities to less-risky bonds to provide income streams for longer-living Baby Boomers.
Notwithstanding the political contest over Australia’s compulsory superannuation framework, over the past 30 years the $3.5 trillion super system has grown into the world’s largest pool of pension assets relative to the size of the economy. Australia runs a current account surplus on the balance of payments because compulsory super has converted the country into a capital exporter. Almost uniquely in the western world,forecasts that the cost of the pension will fall from 2.
Former Prime Minister Paul Keating, Visy executive chairman Anthony Pratt and Treasurer Jim Chalmers at the Superannuation Lending Roundtable., told the roundtable that he rejected the Whitlam government’s socialist proposal for a defined benefit public pension plan in favour of a defined contribution superannuation scheme that put the investment risk on individual workers.
. However, at yesterday’s roundtable, he acknowledged that many retirees lived more frugally than they should, and that many die with substantial super balances because they lacked the knowledge, advice and confidence to draw down on their savings. A Treasury discussion paper will now examine what kind of financial products for retirees can help maximise income while managing longevity risk and mitigate the fear of running out of money.
This is the leap that Mr Keating says super funds must now make from being overweight in equities to less risky bonds to provide income streams for the longer living Baby Boomer generation. It taps into the theme of previous roundtables about getting super funds to invest in long-term debt products to lend to medium-sized and larger businesses, as in the US.
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