Today the Government has released a position paper on the retirement income covenant for public consultation.
The introduction of the retirement income covenant is an important step in encouraging the further development of the retirement phase of superannuation. The covenant will codify the requirements and obligations for superannuation trustees to improve retirement outcomes for individuals, while enabling choice and competition in the retirement phase.
In doing so, the covenant will address a key finding of the Retirement Income Review, which highlighted the opportunity to increase retirees’ standards of living by improving their use of superannuation assets in retirement.
The retirement income covenant builds on the substantial reforms the Government has implemented to improve Australia’s retirement income system. These include the Your Future, Your Super reforms, which ensure the superannuation system works harder for all Australians by reducing waste, holding underperforming funds to account and strengthening protections around the retirement savings of millions of Australians. 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.
All superannuation industry stakeholders, along with other interested parties, are encouraged to provide input on the consultation paper.
The Government will consult further on exposure draft legislation later this year. Subject to the passage of legislation, this covenant will commence from 1 July 2022.
The paper is available on the Treasury website, with consultation closing 6 August 2021.