QSuper launches pension-like product on back of calls for better retirement planning

QSuper has launched a pension-like super fund option as the superannuation industry seeks to meet calls for better retirement planning options for Australians.

The lifetime super product pays like an annuity for the remainder of a fundholder’s life.

Australia’s third-largest super fund QSuper has quietly launched its lifetime pension product, aligning with a key recommendation of the review into retirement income.

The new product is designed to pay members fortnightly payments, which will be adjusted annually and increase over time.

The lifetime super product pays like an annuity for the remainder of a fundholder’s life.

The incentive behind the scheme is that retirees who put their money into the fund will receive a 40 per cent discount on the aged pension assets test, allowing potentially greater access to the full or part pension and guaranteed payments.

The move comes after the review found many retirees were unwilling to draw down on their super balance for fear that they would run out in old age.

QSuper reports almost 50 members have taken the lifetime pension option already, with almost $10m now invested in the scheme.

The average investment sits at around $220,000, but ranges from $33,000 to $560,000.

Many who have invested in the product have only put in a portion of their super, with total balances for those who have invested ranging from $100,000 to over $2m.

QSuper chief executive Michael Pennisi said the lifetime super product was meant to meet the needs of members.

“We are conscious that our members, like all retirees, can live too frugally for fear their money will run out. This has been a major worry for senior Australians,” he said.

“This product is designed to provide retirees with more income in retirement and the confidence that they will have income for life.”

Mr Pennisi said the design of the lifetime super product came after lengthy consultation with regulators to ensure it was right for the Australian environment.

“The retirement income review has rightly called out the need for such products and we’re pleased to be the first major superannuation fund to meet it,” he said.

“The warmth of reception when we have explained it to our members supports our efforts and reinforces our confidence in this being a valuable part of retirement planning.”

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Super Consumers Australia director Xavier O’Halloran said there was a real gap in the market for products like that launched by QSuper.

“Depending on the circumstances you might outlive your savings. These products are really designed to address that,” he said.

But Mr O’Halloran called for regulatory oversight as the number of these products in the market grew.

“APRA collects data on MySuper and Choice products and they could do it on these. They need to otherwise you’ve got no regulatory scrutiny,” he said.

“The products, the way they’re designed, won’t be appropriate for some people and will be for others.”