On 1 July this year, the retirement income covenant came into effect, requiring super fund trustees to consider the retirement income needs of their members, expand individuals’ choice of retirement income products and improve standards of living in retirement.
The Australian Prudential Regulatory Authority (APRA) had already flagged earlier this year that it wouldn’t be prescriptive about what funds need to do to meet the objectives of the covenant, but the regulator has since kept an eye on what has been published so far.
The conclusion?
It is early days, and APRA has warned that funds will have to move ‘swiftly’ for their approach to retirement to be more than just a compliance exercise.
“The reality is that superannuation members are retiring every day, and supporting members to ensure they are best positioned as they move beyond the accumulation phase of superannuation is an imperative,” Margaret Cole, Member of APRA, said recently at a Financial Services Council policy briefing.
In this forum, we will discuss how funds came to their chosen strategy under the retirement covenant, but will also look into the various strategies they have and are considering.
We will address the following points:
- What is retirement income covenant best practice to look like?
- What strategies are best suited to supplement existing investment choices?
- Do deferred annuities and products with a form of guarantee have a role to play or do they just not find a willing audience among members?
- Does insurance have a role to play?
- How do we best engage members in the discussion, without relying on full scale advice as the solution for everyone?
This and more will be discussed at the third [i3] Retirement Strategy Forum.
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