INTHEBLACK September 2026 - Flipbook - Page 36
F E AT U R E
“I am hopeful that, once we progress to super funds
offering comprehensive retirement solutions to
members as a package, lifetime income products
will see much more interest and take-up.”
DR GEOFF WARREN, CONEXUS INSTITUTE
Most Australian annuity products have
a built-in death benefit option. Typically, that
part of the purchase amount not paid out
as income is paid as a death benefit to an
estate thereafter if the investor dies prior
to their life expectancy.
Thorp says education about annuities
is important. However, she adds that
research undertaken in Australia, the US
and other countries demonstrates that
people’s decisions about annuities are “very
sensitive” to the way that they are framed.
“It is pretty clear that if you leave people
to themselves and you offer them a standard
life annuity, most people would not buy
it. No amount of education will solve the
problem entirely, so it will move some
people at the edges, but it does not resolve
the puzzle.”
In a 2025 report titled Simpler super:
Taking the stress out of retirement, Australia’s
Grattan Institute argues that retirees
should be encouraged to use 80 per cent
of their super balance above A$250,000
36 INTHEBLACK September 2026
to purchase an annuity. The remaining super
balance — A$250,000, plus the remaining
20 per cent of any savings above that
level — would continue to draw down via
an account-based pension. Retirees would
still have to access their super for large
purchases, if needed.
The report says that “the government
should embed this pre-set guidance
throughout the retirement income system,
in all relevant communications with retirees,
and at all critical decision points”.
THE APAC PERSPECTIVE
Other countries have compulsory
annuitisation schemes. For example,
Singapore’s Central Provident Fund
is a mandatory social security and pension
savings scheme for working Singapore
citizens and permanent residents.
Funded by monthly contributions from
both employers and employees, it is designed
to help individuals and families fund their
retirement, home ownership and healthcare
