Retirees could be doing it tough for a long time to come as record-low interest rates show no sign of improving, Reserve Bank governor Glenn Stevens has warned.

When retirees stop working, they rely on interest rates to give their savings a boost. But ultra-low bond yields around the world are showing no sign of rising, pushing investors into riskier assets like shares.

Mr Stevens said we need to have a “conversation” about “the retirement income system over the longer run”.

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“The key question is: how will an adequate flow of income be generated for the retired community in the future, in a world in which long-term nominal returns on low-risk assets are so low?

“This is a global question. Just about everywhere in the world the price of buying a given annual flow of future income has gone up a lot. Those seeking to make that purchase now – that is, those on the brink of leaving the workforce – are in a much worse position than those who made it a decade ago.

“They have to accept a lot more risk to generate the expected flow of future income they want.”

Mr Stevens’ comments come after Challenger’s Jeremy Cooper last week warned not even $1 million in super would provide anything more than a frugal retirement, if it was all put in government bonds.

In reality, very few retirees put all their assets into government bonds. However, the ultra-low interest rates mean the allocation to volatile assets is likely to be higher than it would otherwise be, increasing the risk of ruin.

In his speech to the Australian Financial Review Banking and Wealth Summit, Mr Steven’s also questioned the Financial System Inquiry’s call for potentially “onerous” bank capital requirements.

“Of course, capital is not costless. If capital requirements become too onerous then the higher cost of borrowing could impinge on economic growth. But more capital brings the benefit of a more resilient system, one less prone to crisis and one more able to recover if a crisis does occur.

“Crises are infrequent, but very expensive. So there is a cost-benefit calculation to be done, or a trade-off to be struck – higher-cost intermediation, perhaps slightly reduced average economic growth in normal times, in return for the reduced probability, and impact, of deep downturns associated with financial crises.

“The Inquiry, weighing the costs and benefits, concluded that the benefits of moving further in the direction of resilience outweigh the rather small estimated costs.”

Mr Stevens did not say whether he agreed with this conclusion.