27 September 2021

Release of Retirement Income Covenant Exposure Draft

The Morrison Government has today released exposure draft legislation that will introduce a Retirement Income Covenant to give retirees the confidence to spend their superannuation savings, while enabling choice and competition in the retirement phase of superannuation.

The draft legislation would codify the obligation for superannuation trustees to have a retirement income strategy that outlines how they plan to assist their members in retirement. 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.

The Retirement Income Covenant builds on the substantial reforms the Morrison Government has implemented to improve Australia’s retirement income system. These include the Your Future, Your Super reforms that are estimated to save Australian workers $17.9 billion over 10 years while ensuring the superannuation system works harder for all Australians, and reforms to improve the visibility of superannuation assets in family law proceedings.

The Government also announced several measures in the 2021‑22 Budget, which increase superannuation coverage and provide Australians with improved flexibility to contribute to superannuation.

The draft legislation and supporting materials are available on the Treasury website and stakeholders are encouraged to provide their feedback. Consultation will close on 15 October 2021.

Subject to the passage of legislation, the covenant will take effect from 1 July 2022.