Super Consumers Australia welcomes Retirement Income Covenant

Super Consumers Australia says the Covenant will bring a much-needed focus to how super funds can support Australians manage their income in retirement. Now, attention needs to shift to how best to support people through the complex retirement planning process.

With the bill’s passage through parliament today, the Retirement Income Covenant will require all super funds to outline their strategy for helping their members in retirement from 1 July 2022.

“We know the super industry has long been focused on building up a ‘nest egg’. Now it’s time for funds to do more to help people maximise their income in retirement,” says Super Consumers Australia director Xavier O’Halloran.

“There hasn’t been enough focus on giving Australians the guidance and confidence to use their retirement income once they’ve finished working.

“Today’s confirmation that the Covenant will begin in July is a welcome shift towards ensuring Australians have a better quality of life in retirement by making more efficient use of their retirement income.”

The Covenant is likely to see super funds introduce new options and products to help address the needs of their members in retirement. To make the most of this, people will need to be better supported to navigate the complexity an increased product range will bring.

“When the UK reformed its pension system, the government introduced a ‘guidance guarantee’ to ensure everyone could access free, impartial, quality financial advice about their retirement options. 

“Eventually, this guarantee led to the development of a ‘one-stop-shop’, bringing together disparate resources and providing a trusted source of conflict-free advice to complement existing advice channels.

“We’re calling for a similar guarantee to help all Australians navigate these new options and get the most out of the improvements to the system. 

We also continue to see value in expanding the Covenant over time so that the self-managed super sector can benefit from a greater focus on retirement incomes.