Demand for loans from senior Australians seeking to improve their retirement lifestyle is projected to soar during the next decade and yet only a small number of lenders operate in the equity release market. Research led by Michael Sherris at the Australian School of Business reveals that product providers have limited risk exposures and reverse mortgage schemes can be financially attractive to investors. Industry reports suggest the rising costs of an ageing population could be funded by bringing the family home into the equation when it comes to aged care.
From: February 10, 2014 Super Confusion: No Guarantee of Smarter Choices Under Simplified Disclosure Rules
Research from the Australian School of Business (ASB) raises questions about the way new regulations are pre-tested before their introduction, specifically the short-form product disclosure rules for superannuation options. The push to present simplified and transparent information aims to better inform investment decisions, but the researchers find contrary outcomes. Cheerful pie-chart diagrams can be more persuasive than pertinent risk and return information. “The individuals in the experiments did not use the information as the regulators may have expected,” says ASB associate professor Hazel Bateman.
From: August 15, 2013 Can Asia Meet the Healthcare Demands of its Ageing Populations?
Asian nations are facing a dramatic rise in medical costs as they plan for the looming demographic transition to much older populations. Rafal Chomik, from the Centre of Excellence in Population Ageing Research (CEPAR) at the Australian School of Business, says that Asian governments have the fiscal capacity to keep expanding their health systems, but they should heed the successes and failures of reforms in the region and elsewhere to avoid the excessive cost growth seen in the West. Thailand is cited as a good example, and Australia’s strong front line of GPs as well as its pharmaceutical benefits scheme are two initiatives worth emulating, according to CEPAR investigators.
From: August 15, 2013 Annuities Under Pressure: Can Retirement Planning Keep Pace in an Age of Longevity?
While most people are delighted to have a longer life expectancy than their forebears, it presents a considerable challenge for retirees who may outlive their savings and for insurers seeking to manage pensions and lifetime annuities. This longevity risk has industry struggling to develop products at an efficient price and profit. Michael Sherris, a professor of actuarial studies at the Australian School of Business and a leading researcher in the field, proposes a more complex mathematical model for designing annuities which can suit individual likelihoods. Developing appropriate annuity models will help government, insurers and consumers. “The aim is to ensure everybody gets a better deal,” Sherris says.
From: August 06, 2013 Asia in the Ageing Century: A New Boom in Retirement Planning
Many populations across Asia are ageing more rapidly than those in Western countries, yet the development of viable retirement income systems is lagging behind. A new report from the ARC Centre of Excellence in Population Ageing Research (CEPAR) at the Australian School of Business notes that large parts of Asia could benefit from Australian expertise in retirement planning. And providing solutions may offer Australia a new economic boom in financial and insurance services as it assists the region to advance. “Getting a retirement income system right could result in favourable macro-economic rebalancing of growth,” says CEPAR research fellow and report co-author, Rafal Chomik.
From: June 18, 2013 Nassim Nicholas Taleb on Accepting Uncertainty, Embracing Volatility
The day before a big game, regardless of the sport, a team's coach or star player is often asked, "How will you stop the opposing team tomorrow?" The answer typically goes something like this: "We can't worry about the other team. We just have to play our game."
From: December 17, 2012 State of Mind: What's Really in the Balance in the Crisis Fallout?
The after-shocks of the global financial crisis are still being felt – and not only in dollars and cents. The psychological health of retirees (and those nearing retirement age) is suffering, according to a study by researchers at the ARC Centre of Excellence in Population Ageing Research, which shows depression and anxiety have been running higher post-crisis than when the crisis was in its most acute phase. The research underlines the need to prioritise mental health issues for older Australians and to ensure employment opportunities for those who are able. The risk is generating a new underclass, experts warn.
From: March 20, 2012 Population Ageing: How to Turnaround Attitudes to Older Australians?
Attitudes towards older people have changed. The group once seen as needy and deserving is often considered a burden these days, says Hal Kendig, chief investigator of the ARC Centre of Excellence in Population Ageing Research, based at the University of New South Wales. Stereotypes are unhelpful in the drive to support an increasing number of older people towards productive and healthy later years. Australia will need its older workforce in the future, and a new body of research highlights its capabilities. Signs of a turnaround in attitudes are also on the horizon.
From: March 05, 2012 Paying for Retirement: Enhancing the Allure of Annuities
With the federal government's announcement of impending superannuation reforms, the spotlight is again on how to pay for increasingly longer retirements. Since saving for life after work became mandatory in the early '90s, Australians have shown a marked preference for cashing out super. The appeal of investing in an income stream through an annuity has been miniscule. But in Switzerland about 50% of the accumulated pension wealth is annuitised. The "generous" means test for the pension in Australia, in part, may explain the difference, as Monika Bütler, dean of the School of Economics and Political Science at University of St Gallen, told a recent Australian School of Business seminar. But that may not hold if the government keeps changing the rules.
From: September 27, 2011 The High Price of Living Longer: Pay-as-you-go or No Frills Aged Care?
The Productivity Commission's controversial recommendations for aged care have provided food for thought for policymakers, insurers and many older Australians. The news that an ageing population must fund its own care costs, where possible by drawing on that treasured asset, the family home, was only the beginning. The insurance industry is confronting market failure for its inability to provide long-term care products. While many are hoping the government will pick up the slack, a few older Australians already have taken flight for less costly living offshore. But, as Australian School of Business actuarial professor Michael Sherris says, the huge issue of funding aged care won't go away so readily.
From: September 13, 2011