Treasury has released a position paper outlining the proposed principles to apply to a “retirement income covenant” aimed at securing the retirement incomes of Australians and improving their standard of living after finishing work.
Minister for Revenue and Financial Services, Kelly O’Dwyer said the covenant would, for the first time, require trustees to help their members meet their retirement income objectives.
“For too long superannuation has been focused only on accumulating savings,” Ms O’Dwyer said.
“A retirement income framework is a pivotal part of the Government’s reform agenda for superannuation — an agenda squarely focused on protecting and improving outcomes for superannuation members.”
She said the covenant would form the cornerstone of the new framework.
“It will be added to the Superannuation Industry (Supervision) Act 1993, which will elevate the consideration of members’ retirement income needs to sit alongside the other fundamental obligations of trustees, such as the investment, risk management and insurance needs of their members,” Ms O’ Dwyer said.
“To fulfill the overarching purpose of superannuation, it is essential that trustees develop a retirement income strategy and consider the retirement income needs of their members.”
She said the framework would also include supporting regulations that obliged trustees to offer their members a comprehensive income product for retirement and to guide and support members to select the right retirement solution.
“The Government is prioritising the retirement income covenant and supporting regulations as the first phase of the retirement income framework,” Ms O’Dwyer said.
“The disclosure metrics are another crucial part of the framework to better inform consumers and aid comparison of retirement products.”
She said Treasury was currently developing disclosure requirements and was expected to consult on a detailed proposal later in the year.
Submissions on the proposed covenant principles will be accepted until 15 June and the 18-page position paper can be accessed at this PS News link.
