In this guide
Retirement income covenant position paper released
The Federal Government has released its Retirement Income Covenant position paper that outlines what the Government expects a retirement income covenant to look like.
The Government committed to a retirement income covenant for superannuation trustees in the 2018–19 Budget and intends for it to take effect on 1 July 2022.
“The covenant will codify the requirements and obligations for superannuation trustees to improve retirement outcomes for individuals, while enabling choice and competition in the retirement phase,” the paper states.
The Government is concerned that retirees are attempting to live off the income of their superannuation investments and are not using their capital, citing Retirement Income Review (2020) findings that many retirees die with a majority of the assets they had at retirement.
The Superannuation Industry (Supervision) Act 1993 currently includes requirements for trustees to formulate, regularly review and give effect to investment, risk management and insurance strategies. And the Government wants to add a retirement income covenant to the Act outlining a fundamental obligation of trustees to formulate, regularly review and give effect to a retirement income strategy.
Trustees of all superannuation funds (including self-managed superannuation funds) will be required to develop a strategic document that outlines their plans to assist their members to “achieve and balance the following objectives: maximise their retirement income; manage risks to the sustainability and stability of their retirement income; and have some flexible access to savings during retirement”.
Latest Superannuation Inquiry is “political theatre”: ASFA
The Association of Superannuation Funds of Australia (ASFA) has slammed the latest inquiry into the superannuation sector as an “act of political theatre”.
