Australia’s banking and company regulators will be working together to review the retirement income strategies of superannuation funds to support the implementation of the retirement income covenant that came into effect on July 1.
Speaking at The Conexus Institute and Investment Magazine’s Retirement Conference in Canberra on Wednesday, Jane Eccleston, senior executive leader, superannuation at ASIC said the review will look at what has been done well, areas for improvement and where trustees need to focus their attention.
“Our intent is not to prescribe how trustees should be assisting their members, but to help trustees to refine and evolve their strategies over time in ways that best meet the needs of their fund’s members,” said Eccleston. Taking a member-outcome approach, ASIC and APRA will be releasing the results of the review early next year.
Retirement is a critical issue for Australians with an estimated 3.6 million people set to retire in the next decade, accessing a $750 billion pool of savings.
At this early stage of the retirement income covenant coming into effect, the regulators have observed fund trustees are at different phases of the implementation. Some retirement strategies provided more detail on current products and plans for expansion than others according to Eccleston. “Some of the summaries were more detailed than others, more readable from a member perspective, or easier to find on the fund’s website.”
The key to successful implementation is putting members at the heart of the strategy said Suzanne Smith, executive director, superannuation, APRA. “Taking a genuinely member-centric focus is critical to a successful retirement income strategy and offering.”
The regulators are taking a joint approach to assist the industry to implement the retirement covenant according to APRA’s Smith. They will focus will be how trustees implement retirement income strategies within existing frameworks for business planning, outcomes assessment, product target market determinations, risk assessment and governance.
“We will maintain this close connection as trustees progress the implementation of their retirement income strategies,” she said.