Retirement Income Covenant Position Paper
The submission to the Treasury in relation to its Retirement Income Convenant Position Paper, was prepared by the Superannuation Committee of the Legal Practice Section of the Law Council of Australia.
The Committee appreciates the intention behind the proposed introduction of a retirement income covenant that would require superannuation trustees to develop a retirement income strategy for their fund members.
The Committee notes that there will need to be a number of additional clarifications to the legislative and regulatory framework in order for the covenant to have its intended effect of expanding the range of retirement income products and allowing members to better balance competing risks in retirement.
The Committee has some concerns with:
- the implication in the Position Paper that trustees owe a best interests duty to individual members, as opposed to the members collectively; and
- the intermingling of a trustee’s obligations as an issuer of a superannuation product with any obligations a trustee may owe if it provides advice as an Australian Financial Services (AFS) licensee.
The Committee suggests that the legislation introduced to implement the government’s proposal should clearly delineate the obligations applicable to the trustee as the issuer of a retirement income product and the obligations applicable to the trustee if it provides advice in relation to a retirement income product (including exemptions, where appropriate).