With the federal government recognising the need to address the issue of life insurance legacy products, the Actuaries Institute says it must take robust action to rationalise the products.
According to the Actuaries Institute, the organisation has used its pre-budget submission to Treasury to address some of the government’s responses to the Financial System Inquiry (FSI).
Within its submission, the Actuaries Institute said it is “pleased that the government has endorsed recommendation of the final FSI report” including the introduction of a mechanism to facilitate the rationalisation of legacy products in the life insurance and managed investments sectors.
“The FSI recommended action to resolve the situation and the government has accepted that recommendation. We therefore urge the government to pursue this measure more vigorously,” the institute said.
“Rationalisation of life insurance legacy products has been an issue for a considerable time now, despite general acceptance that the proposal has merit."
The Actuaries Institute also said it strongly supports the government’s intentions to remove legislative impediments to product innovation and the options to pre-select a comprehensive income product for retirement (CIPR).
“The introduction of a CIPR-style product option should deliver greater income security and protection throughout retirement,” the institute said.