22 May 2020

Deferral of retirement income framework legislation

Today the Morrison Government has announced plans to defer the introduction of the Retirement Income Covenant, previously scheduled to commence on 1 July 2020.

The deferral is necessary to allow continued consultation and legislative drafting to take place following the Coronavirus crisis.

Superannuation laws currently require trustees to formulate, review and give effect to investment, risk management and insurance strategies. The purpose of the Retirement Income Covenant is to establish an additional obligation for trustees to formulate a retirement income strategy for their members.

The deferral of the Retirement Income Covenant will also allow drafting of this measure to be informed by the Retirement Income Review.

The revised date will be determined following further consultation on the Covenant.

Assistant Minister Jane Hume said, “We’ve been working for some time on a Retirement Income Covenant. While efficient accumulation is imperative and we are steadily chipping away at the inefficiencies of that part of the system, we need to build a smoother transition from the accumulation to the de-accumulation phase.”

“Of course, there is nothing stopping funds and their trustees from developing retirement income strategies now and we’d encourage them to do so.  Trustees don’t need to wait for us to legislate the Covenant.”