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BT Financial Group appoints Rodney Greenhalgh as Head of Retirement

Wed, 18 May 2011 04:35:56 +0000

David Lees, General Manager – Super, Investments and Retirement at BT Financial Group, today announced the appointment of Mr Rodney Greenhalgh as Head of Retirement effective 6 June.

Mr Greenhalgh will be responsible for driving the implementation and execution of the Group’s retirement strategy. He will lead the Retirement team and report directly to Mr Lees.

“We are very pleased Rodney is joining our team. He brings with him significant experience in product management and development in the super, retirement and funds management sectors. His insight into the retirement market will help us take our offer to Australians to the next level,” Mr Lees said.

Mr Greenhalgh has over 17 years experience in the wealth management industry. Most recently, he held the role of General Manager, Product and Marketing at Challenger and was responsible for maintaining, developing and marketing Challenger’s annuity and managed fund products. Before that, he led the product management function across managed fund and life company products.

Prior to Challenger, Mr Greenhalgh carried out a number of senior product development roles at MLC.

Mr Greenhalgh has a of Bachelor of Economics (Honours) from the University of Sydney and a Graduate Diploma in Applied Finance from the Securities Institute of Australia (now FINSIA).

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Actuaries disappointed longevity risk ignored again in 2011 Federal Budget

Wed, 11 May 2011 00:34:16 +0000

The Institute of Actuaries of Australia (the Institute) has today said it was disappointed the pressing issue of longevity risk was largely ignored in the 2011 Federal Budget.

The Institute has been urging the government to develop longevity risk policies, including removing barriers to the development of a new generation annuities market, to meet the growing challenges of Australia’s ageing population.

Recognising many retirees superannuation will not meet their retirement needs, Institute chief executive Melinda Howes it was time the government took decisive action on this issue.

“We were pleased the Federal Government followed our recommendation and allowed older Australians to boost their standard of living in retirement by working part-time without jeopardising their pension income. From 1 July, age pensioners will be able to earn up to $250 per fortnight before their pension will be impacted by the means test.”

Ms Howes said although this positive change was made as part of the Government’s workplace participation initiatives, the issue of longevity risk continues to be side-lined when a number of solutions are available. These include allowing development of flexible “new generation” annuities which protect against the risk of outliving your retirement savings and the market risk of losing superannuation capital in retirement.

“Retirees need access to products that reduce the two major risks they face, market and longevity risk. Innovative annuity products are ideally suited to meet these objectives however a number of legislative impediments are limiting their development,” she said.

In its pre-Budget submission, the Institute urged the government amend the Superannuation Industry Supervision Act Regulation 106 as it is unnecessarily prescriptive and as a result is hampering innovation. The unfavourable treatment of annuities under aged care and Centrelink rules should also be reversed and the tax rules on deferred annuities should be changed so that, if taken out in the drawdown phase, the product is regarded as a pension (rather than a non-pension) for tax purposes.

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Actuaries call for longevity risk focus – including new generation annuities – in Federal Budget

Thu, 17 Feb 2011 07:35:57 +0000

The Institute of Actuaries of Australia (the Institute) has today urged the Government to prioritise longevity risk policies, including development of a new generation variable annuities market, to meet the challenges of Australia’s ageing population. In its Federal Budget submission, the Institute’s approach recognises that superannuation will likely provide an inadequate retirement income, due to both market
risk and increasing retiree longevity.

“We urge the Government to prioritise Budget policies aimed at managing Australia’s ageing population, including flexible ‘new generation’ annuities which protect against the risk of outliving your retirement savings and the market risk of losing superannuation capital in retirement,” said Melinda Howes, Institute CEO. She said while Australians had long been warned about the risk of outliving their savings, the Global Financial Crisis had underlined an additional market risk.

The Institute believes new generation annuities should seek to emulate some features of popular account-based products like allocated pensions. While allocated pensions are market-linked and provide no income guarantee, they provide retirees with access to their capital, payment flexibility and potential benefits from a rising share market.

“Account-based products give retirees more control over their income and assets, allowing them to adjust to changing circumstances and to respond to unexpected or ‘lumpy’ expenses’,” Ms Howes said. “However, while retirees enjoyed solid investment returns in these products for the last 20 years or so, the GFC saw many experience significant capital erosion, which they will not be able to recover.”

“Retirees should be able to purchase a product which offers them protection against the two major risks they face, market risk and longevity risk, and they should be able to choose to be fully or partially protected from either or both of these risks, depending on their circumstances.” Lifetime annuities, which provide such guarantees today, are unpopular due to their inflexibility and perceived low returns.

In order for innovation to occur in the annuities market, the Institute believes that:

Superannuation Industry Supervision Act Regulation 106 must be revised as it unnecessarily prescriptive;
the unfavourable treatment of annuities under aged care and Centrelink rules must be reversed;
annuities and deferred annuities should be able to be issued as a component of an account-based pension; and
the tax rules on deferred annuities should be changed so that, if taken out in the drawdown phase, the product is regarded as a pension (rather than a nonpension) for tax purposes and that there should be be a clear, regulatory regime for variable annuity style products.

In its submission, the Institute notes the superannuation market is still immature and that many people will reach retirement with a sum too small to annuitise (less than $100,000).

“For people with small retirement sums, a deferred annuity may act to deliver additional insurance, through additional income in extreme old age. Or, retirees could be encouraged to live off the superannuation they do have, but defer taking the government aged pension for as long as possible. Such people could be rewarded with a higher age pension, of up to double the standard age pension for a 10-year deferral,” Ms Howes said.

SUMMARY OF FEDERAL BUDGET RECOMMENDATIONS:

Remove barriers to innovation in the annuity product market, such as the unnecessarily prescriptive SIS Regulations that limit the design of these annuities, and the unfavourable treatment of annuities under aged care and social security rules.
Allow the age pension to be deferred, so that if someone eligible for the Age Pension keeps working for up to 10 years after Age Pension age, their Government Age Pension increases. This means individuals can fund the first part of their retirement for a known period and rely on a higher Age Pension to manage their longevity risk.
Encourage workforce participation by removing earned income from the Age Pension means test so retirees are not penalised for working if and when they can.

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