The FINANCIAL — Mercer has responded to rising demand from financial advice dealer groups for affordable solutions to longevity risk – the risk of outliving retirement savings – with the innovative retirement investment option, LifetimePlus, now available on the Mercer Portfolio Services (MPS) retail platform.
MPS, supported by Colonial First State’s wrap technology, is the first retail platform to offer LifetimePlus, an investment option that forms part of an account-based pension, paying members an income for the rest of their lives. It is a solution where the risk of outliving savings is shared among other retirees, with no third-party shareholder and no insurance premiums, according to Mercer.
The milestone expands the availability of the product to over 50 financial advisors and 7000 customers who access the MPS, and is the first step in enabling a broader group of advisers to provide LifetimePlus to their clients.
Dr David Knox, Senior Partner and key architect of Mercer LifetimePlus, said, “Around 1000 Australians are moving into retirement every business day and we know that on average they will outlive their retirement savings by at least five years, so the demand for effective and sustainable solutions to longevity risk is only going to increase”.
“We are thrilled that Colonial First State is embracing innovation and delivery of new solutions to customers and we look forward to working with them to continue to expand the number of customers and advisers who have access to Mercer LifetimePlus through this service.”
Chris Stevens, General Manager of Colonial First State Custom Solutions, said, “We share with Mercer a commitment to meet more retirees’ needs, so we’re pleased that Colonial First State can help Mercer deliver this initiative to its clients. It is also consistent with our strong focus on supporting our key business partners’ strategic objectives.”
Until very recently, Australians have been let down by a lack of products that pay an income in retirement for the rest of their lives. Putting LifetimePlus on a platform is a response to rising demand from dealer groups for affordable, cost-effective solutions to longevity risk.
Products like LifetimePlus are commonly recognised as an essential ingredient in improving the sustainability of Australia’s retirement income system. In its final report, the Financial System Inquiry noted that a “greater use of products that pool longevity risk could significantly increase retirement incomes. For many retirees, incomes from a comprehensive income product for retirement could be 15-30 per cent higher than those from the current typical strategy of drawing the minimum amount from an account-based pension.”
Mercer LifetimePlus was recently named Best Innovative Retirement Product at Money Magazine’s Best of the Best awards. This is the fourth honour received by LifetimePlus in 2015, following awards for innovation from CANSTAR, Chant West and Conexus.