AUSTRALIA - Australians will be given access to benefit projections as part of the superannuation system, under a plan revealed this week by superannuation and corporate law minister Nick Sherry.
He said: "Developing a manner of providing reasonable benefit projections and superannuation calculators could significantly improve our system."
Sherry used the compulsory DC system in Sweden as an example, with its annual report to members, known as the 'red envelope', featuring a projection to State pension access age.
He said offering this would place greater emphasis on the long term rate of return and elements that impact on it, such as contribution levels and charges.
He said: "In the UK, the issuing of projections has seen a significant increase in fund membership awareness of the need to increase contributions."
David Harris, managing director of Tor Financial Consulting, said currently Australians were not given information that would ring alarm bells that their expectations for retirement might not meet the reality.
But he said the introduction of benefit projections would be a challenge because of issues such as lost accounts.
He said: "This idea is honourable, but the question is, 'are people going to read it?'. It's a worthy goal, the devil will be in the detail and the practicalities."
Sherry admitted there were issues to overcome, such as consolidating account information.
He said: "Whilst there are a number of complex design features, assumptions and legal parameters to consider, as other countries have shown, they are not insuperable to overcome."
The People's Pension, Atlas Master Trust and The Cheviot Trust have been granted authorisation from The Pensions Regulator (TPR), taking the total number of authorised master trusts to 18.
Pension schemes have been warned they may now face a more challenging legal test if they wish to fix drafting errors.
The Greene King Pension Scheme has appointed XPS Pensions as its actuarial and investment adviser following a competitive tender process.
Professional Pensions has compiled a list charting the progress of master trust authorisation. View our list in full here...