INTHEBLACK September 2026 - Flipbook - Page 38
F E AT U R E
happier with the security that a guaranteed
income for life can bring.
“Our superannuation system is
world-class at building retirement savings,
but it is still a work in progress when it
comes to delivering sustainable incomes
in retirement,” Challenger’s chief financial
officer, Alex Bell, says. When people stop
working, risks like longevity, market timing
(sequencing risk) and inflation become much
more real, and a guaranteed income directly
addresses those.
Bell believes that annuities and
account-based pensions are complementary,
and the most effective retirement plans
combine both. “What is encouraging is that
retirees and their advisers are combining
different income types within a broader plan
rather than relying on a single product,”
she says. “An account-based pension provides
flexibility and access to capital, with returns
linked to markets.”
Bell says using annuities in the defensive
sleeve of a portfolio provides certainty around
income, the potential benefit to Age Pension
entitlements, and in many cases increases
the estate balance — which is contrary
to popular belief.
“The primary barrier is awareness,” she says.
“Challenger research found that 59 per cent
of Australians aged over 60 do not know
about, or have not heard of, lifetime income
streams as a retirement strategy.”
READ
an article about
how much super
you need to retire
in Australia
A SAFETY NET
Theo Marinis CPA, director and financial
strategist at Marinis Financial Group, says
he cannot recall any of his clients asking
about starting lifetime income streams.
However, he has suggested them to some.
A recent case was a widow who could have
used the 40 per cent assets test discount
on funds held in an annuity to receive higher
Age Pension payments.
“For those that need extra cash flow, it
does make sense,” Marinis says. “There is
actually a place for it, but you have got
to sell it — people are not asking for it.
As an adviser, you have to explain the
benefits to them.”
Super Consumers Australia deputy CEO,
Dr Katrina Ellis, says that with the median
superannuation balance of retirees at age
65 around A$200,000, the majority will
be reliant on receiving either part or full
Age Pension payments every fortnight.
“As you spend down your assets, you
become eligible for it. The thing that we
say is everybody should contact Services
Australia and test their eligibility for the
Age Pension,” she says. “The Age Pension
and government support is still there as
the foundational pillar of income in
retirement, and it is there for everyone
once you meet the means testing.”
SIMPLIFICATION IS NEEDED
Ellis says a major frustration is that while
low-touch MySuper default accounts have
worked well for those in the accumulation
phase, there is no default offering to retirees.
“The way the system works at the moment,
at the point you want to retire, it suddenly
becomes really complicated. And the default
when you retire — if you do nothing — is
you stay in accumulation.
“We have this incomplete system, and the
final frontier of retirement income is still yet
to be solved. The policy settings are not there
right now to make sure that the whole thing
works seamlessly for people.”
Ellis says there should be an automatic
continuation of MySuper where
superannuation trustees work out “a sensible
drawdown strategy” that would be sustainable
over a person’s life. “Wouldn’t that be great?
But that is not how the system works.”
The use of an annuity solves longevity risk,
but an account-based pension combined
with the Age Pension will probably suit most
people anyway, she says. “Other countries
around the world have had mandatory
annuitisation and so it is a norm that
everybody buys an annuity. But in Australia,
annuities have struggled to sell because
it is too complex.” ■
UPSKILL
with CPA Australia’s
range of
superannuation
short courses
38 INTHEBLACK September 2026
Disclaimer: The views and opinions expressed in this article do not necessarily reflect the official views, policies or positions
of CPA Australia.The information provided in this article is for general informational purposes only. It does not constitute
accounting, legal, taxation, financial or other professional advice and should not be relied upon as such. CPA Australia does
not warrant the completeness or accuracy of the information and accepts no liability for any loss arising from reliance on it.
Readers should seek appropriate independent professional advice before acting or relying on any content discussed in this article.
