AUSTRALIA - The Association of Superannuation Funds of Australia (ASFA) has called on the government to establish a lifetime market linked pension, available to all funds, that caters for pensioners that live beyond their life expectancy and which allows a smoothing of income payments.
In a submission to the government’s review of pension provision in small superannuation funds, ASFA said the desire of small funds to issue defined benefit pensions was understandable.
“The desire by small funds to issue defined benefit pensions… arises from a mixture of the needs of certain small fund members to access an income stream for their lifetime, a perception that the commercially available products are poor value and a desire to retain control of their assets in the pension phase and should they die early,” ASFA wrote in the submission.
“These competing needs highlight what many see as a deficiency of both the allocated and market linked income stream products. Both products are generally targeted at about average life expectancy and do not necessarily meet the needs of members requiring an income stream for their lifetime.”
To counter the perceived problem, ASFA said it supports the removal of the concepts of “guarantee” and “defined benefit” in relation to lifetime and life expectance in pensions provided by small funds and the establishment of a lifetime market linked pension.
Income smoothing, in relation to the lifetime market linked pension, would be achieved through income averaging and be phased in from commencement of the pension with a maximum permissible smoothing over five years.
The association also recommends updating “out dated” valuation factors in the SIS regulations to more accurately reflect the value of a pension purchased and provide parity of valuation between income streams.
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.