ato logo
Search Suggestion:

Superannuation Industry Stewardship Group special briefing 29 July 2021

Summary of key topics discussed at the Superannuation Industry Stewardship Group special briefing 29 July 2021.

Last updated 6 September 2021

David Knox, Co-chair of the Superannuation Industry Stewardship Group (SISG), opened the meeting and introduced Treasury to lead the discussion on the Retirement Income Covenant (RIC).

Retirement Income Covenant

Treasury had released a position paper on the Retirement Income CovenantExternal Link for consultation.

The position paper is intended to provide an indication of the principles of the covenant and the direction of draft legislation that will be released later this year. The Covenant has a scheduled start date of 1 July 2022.

There is no existing covenant relating to retirement income. This covenant will place an obligation on trustees to formulate, review regularly and give effect to a retirement income strategy, outlining how they plan to assist their members to balance key retirement income objectives including:

  • maximising their retirement income
  • managing risks to the sustainability and stability of their retirement income
  • having some flexible access to savings during retirement.

SISG members provided feedback and comments on a number of areas including:

  • the practicality of the 1 July 2022 commencement date
  • the need to see the guidance that Australian Securities and Investment Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) are developing early on, once legislation has passed, so they can capitalise on this
  • the risk of setting out a plan for members where individual funds might not have full visibility of all member level, assets or products
  • the quality of advice members could potentially receive from funds and other government organisations
  • existing legislative barriers and constraints about advice laws
  • the need to ensure the RIC does not become a box-ticking exercise for Self-managed super funds, providing value to trustees while minimising compliance burdens
  • how to ensure the right advice is distributed to cohorts of members
  • consistency in advice across the sector.

Treasury noted the feedback and encouraged members to provide their feedback through formal submissions to the position paper. ASIC, APRA and ATO continue to work closely with Treasury on the RIC.