As people squirrel away money for their retirement, they have to consider whether they will have enough to live on over increasingly longer lives.
Treasury's David Gruen says longevity risk will become an increasingly important issue as the nation grows older and given that most insurance products now do not address this.
However, the executive director of Treasury's macroeconomics group does not want longevity risk solutions that lock retirees into inappropriate high fees and fail to provide incentives for the superannuation industry to become more efficient.
"This is an important area for the financial system inquiry to examine," Dr Gruen told a Committee for Economic Development of Australia conference in Canberra on Monday.
Association of Superannuation Funds of Australia chief executive Pauline Vamos agreed.
"The system is designed from the time you start work until the time you retire. It is not designed as a whole of life system," she told the conference.
Ms Vamos said the financial system inquiry, which is being led by former Commonwealth Bank boss David Murray, must look at ways super funds can make long-term investments while retaining short-term liquidity.
In Australia, people have choice and can chop and change their super fund, but do expect to get at their money within 30 days.
In some overseas markets, like Canada's defined benefit schemes, the funds know exactly when they have to pay out money in 20 to 40 years' time, allowing for longer term investments.
Australians want to know how much that are going to get each week from their super in retirement, while being able to convert that to lump sums if needed.
"How do we build a system that allows that but doesn't mean we have to keep investing short term to really meet those liquidity needs," she said.
Dr Gruen said there also needed to be policy consideration of further options to increase competition and drive down costs.
Australians pay about $20 billion a year on super fees, around three times that paid in the UK.
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