The ageing of the population is a well-known global phenomenon caused by declining fertility and mortality rates. The social and economic consequences are many and have placed the need for robust and sustainable retirement income systems at the forefront of policy development within many countries.

Within Australia, superannuation plays a key and increasing role in providing retirement income. Historically, actuaries have played an important role in the development of pension and superannuation plans around the world and this is continuing in the current environment. Notwithstanding the shift from defined benefit to defined contribution plans, there is a range of issues that require actuarial research and analysis to ensure that, as far as possible, the developing retirement income system is equitable, efficient and sustainable.

To understand the breadth of issues to which saving for retirement gives rise - and to which actuarial research can provide a key strategic analysis and decision-making input - consider some of the following issues that need to be addressed by the Australian financial services industry in the years ahead:

• What is an adequate or required level of retirement income?

• Is the Superannuation Guarantee Levy at 9% adequate? How can it be improved so that it is more flexible to respect the fact that not all households have the same needs in retirement?

• Should members be required to contribute? Is "soft compulsion" the answer?

• Who bears the risk if there is a failure at the fund operational level, in the markets or by an outsourced provider? Is capital or are fund reserves the answer to some of these risks?

• What are the implications of the new taxation regime for superannuation? Is it financially sustainable? Will it drive the most appropriate behaviour by retirees? If not, how can the regime be improved?

• How can post-retirement products be improved to better meet the needs of retirees?

• What about increasing longevity? What are the implications in terms of products, risks and adequacy?

• Should aged care and/or health costs be part of the system?

Actuarial research and retirement savings

There are numerous ways in which actuarial research can provide a valuable contribution as part of a multidisciplinary approach to solving the complex problems associated with saving for retirement. For example, the modelling and analysis of:

• retirement income needs for different households;

• the impact of volatile investment earnings before and after retirement;

• the impact of capital or operational risk reserves on superannuation funds;

• the impact of continuing increases in life expectancy; and

• the sustainability and/or equity of the new superannuation taxation regime.