ASIC’s recent move to update its guidance for superannuation calculators and retirement estimates will allow funds to continue to provide basic retirement projections in annual member statements and assist members choose a retirement strategy under the Retirement Income Covenant.
The updated guidance considers both static and interactive calculators. Relief for the use of static calculators provide a convenient way for funds to include basic retirement income projections in member statements, boosting member engagement and supporting the re-framing from accumulation balance to income in retirement.
Meanwhile interactive retirement calculators are considered an important component of most superfunds’ retirement income strategies, providing low-cost forecasting tools for customers to review and explore their financial situation and seek advice if necessary.
Calculators have been identified by many funds as having an important role to play in determining retirement solutions given the high cost and restricted availability of financial advisers. ASIC’s work on interactive calculators is important as many assumptions can be determined by the fund such as investment returns and, importantly, multiple product types. The calculators give members a tool to explore this in detail.
Under the Retirement Income Covenant, which came into effect on July 1, superannuation trustees are required to devise retirement income strategies. The new legislation is aimed at expanding the superfunds’ focus beyond the accumulation phase to the retirement phase and to encourage funds to come up with a coordinated guidance and product strategy to support their members in retirement. This is especially relevant now given Australia’s ageing population.
Class order relief
ASIC has given class order relief from Australian financial services licensing and personal advice requirements in the Corporations Act for providers of these tools as the super calculators and retirement may involve personal advice.
Under ASIC’s relief, a trustee may give a static retirement estimate to a member in the accumulation phase but not to a member who invests in a superannuation product in the retirement phase. Providers must not promote specific products in order to rely on the relief.
“We expect trustees that choose to provide these tools to do so in a way that fosters informed decision making by members, without promoting specific financial products,” said ASIC commissioner Danielle Press in a media release.