The Federal Government should only allow life insurers to use the product descriptor “annuity”, the Actuaries Institute says.

In a submission to Treasury on the proposed retirement income framework, the institute calls for greater clarity in the language used on these new products.

“A group self-annuitisation product is defined in the glossary of the discussion paper as covering a broad range of non-guaranteed longevity pooling products,” the submission says.

“This is despite the term having originated in academic literature to describe a specific type of non-guaranteed longevity pooling product.”

The institute argues use of the term “annuitisation” can confuse consumers into believing they are buying an annuity product from a life insurer. They may also believe the product is covered by prudential regulations on life insurance.

“We propose that the term ‘annuity’ should be reserved for products offered by life insurers.

“These could be a lifetime annuity, term certain annuity or a pooled annuity offered by a life insurer that has limited or no guarantees.”

A pooled product with no guarantees offered by an entity other than a life insurer could be termed a pooled pension, the institute says.

The institute wants a gradual introduction of retirement income products, because the means test treatment of products such as deferred annuities has yet to be seen.   

It argues the current market and legislative rules for retirement products are immature due to the risks associated with immature products that could fail, and longevity risk.

“Mis-selling and disclosure risks are also high. These risks need to be thoughtfully considered and mitigated at the outset wherever possible.”