The Government committed to introduce a retirement income covenant for superannuation trustees (including trustee for SMSF and SAF) in the 2018-19 Budget and has now released a position paper on 19 July 2021.
The position paper states the intention to include a retirement income covenant in the Superannuation Industry (Supervision) Act 1993 which outlines a fundamental obligation of trustees to formulate, review regularly and give effect to a retirement income strategy.
The retirement income strategy will outline the trustee’s plan to assist their members to achieve and balance the following objectives:
- maximise their member’s retirement income;
- manage risks to the sustainability and stability of their retirement income; and
- provide some flexible access to savings during retirement.
The paper also highlights that retirees struggle to develop effective income strategies on their own and that much of their savings within the superannuation system are not used to provide an adequate retirement income. As a result, the covenant aims to improve these mechanisms by creating an obligation for superannuation trustees to assist their members to meet key retirement income goals.
Consultation is open until 6 August 2021 and the Government aims to have the changes come into effect from 1 July 2022.
Treasury of Australia, Position paper, 19 July 2021