Retirement
New legislation to force funds to think about life after accumulation
Retirement
New legislation to force funds to think about life after accumulation
Advocates say that the new reforms will rebalance the super system.
New legislation to force funds to think about life after accumulation
The Council on the Ageing (COTA) Australia has welcomed the impending arrival of the federal government’s new retirement income covenant legislation.
COTA chief executive Ian Yates said that the new legislation represented a significant step toward improving the lives of older Australians.
“While superannuation funds have a responsibility to optimise the ‘nest egg’, they have an equal responsibility to ensure that when the egg is hatched, the funds have products and services that support the optimum quality of life and dignity of their members in their retirement,” he said.
Under the current rules, retirees who can access their superannuation after turning 60 receive little or no guidance from their fund when it comes to navigating the risks involved.
When the retirement income covenant comes into effect from 1 July 2022, it will codify new obligations for superannuation trustees when it comes to how they handle members approaching retirement.
Essentially, the new legislation will force funds to outline a retirement income strategy for members ahead of time, detailing what a member’s retirement will look like or, in the event that their current fund falls short, give them the opportunity to look elsewhere for a better product.
Mr Yates said that a bulk of the superannuation system was focused on accumulation, with not enough consideration given to helping retirees reap the benefits of doing so.
“The Retirement Income Covenant focuses on getting funds to rebalance their planning and advice equally on the accumulation and retirement phases, ensuring the system works as it was intended,” he said.
Financial Services Council’s Sally Loane was similarly supportive of the measure.
“There is an urgent need for the Retirement Income Covenant as a growing proportion of Australians move into retirement, and we encourage the Parliament to pass the bill without delay,” she said.
Earlier this year, federal minister for superannuation Jane Hume said that the new legislation would give retirees “the confidence to spend their superannuation savings” while also enabling additional choice and competition in the retirement phase of superannuation.
“The strategy must consider how the trustee will assist their members to balance maximising their retirement income, managing risks, and have some flexible access to savings,” Ms Hume explained.
About the author
About the author
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more