Ernst and Young, known as EY, has released a report arguing that aging populations is a “global challenge” which will require more reliance on self-funded retirement in the future.
The report, Building a better retirement world: insights for better outcomes in the global pension and retirement market, highlights the “inevitable need for rapid reform and greater transparency in international pension and retirement systems”.
This need for reform is driven by “increasing fiscal pressure on budgets due to ballooning health and pension costs and the demands of baby boomers wanting to maintain a dignified lifestyle in their retirement”, said Graeme McKenzie, EY’s Global Pension Leader.
“The increasing importance of pension and retirement systems to ensure dignified long term retirement requires an improved quality of regulation, supervision, governance and transparency to align to higher consumer expectations”, said McKenzie.
While the Australian superannuation system is “well positioned relative to many other countries”, there are still challenges and with further regulatory changes are “inevitable”. These challengers include the need to “boost consumer confidence in the system”, such as through an “improved focus on members to ensure their needs are being met both before and after retirement”.
McKenzie also encourages the superannuation industry to work with government and regulatory bodies to “develop a strong framework for that will ensure the future health of the system”.
The EY report identifies a number of “key areas that present opportunities for superannuation and retirement providers across the globe”, including:
- The need to balance benefit expectations with financial resources
- Greater acceptance of “regulation, supervision, governance and transparency”
- Focus on “operational excellence”
- A re-evaluation of “investment strategy, asset allocation policy and operating models”
- Increasing engagement by finding “simplicity in complex systems”
- Becoming “customer-centric”
The full report is available on the EY website.
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