Policy & Legislation

Policy & Legislation

Policy & Legislation

Building Australia’s Retirement Phase System.

In October 2015 the government announced a distinct priority to improve the efficiency and operation of the superannuation system and boost retirement incomes.  The list below highlights some of the key legislative changes and policy developments that impact the way superannuation funds deliver retirement income products to their members.

This page is a work in progress and will be edited as changes occur in retirement income policy in Australia.

November 2020:

Treasury issued Your Future, Your Super package for consultation.

Government release the Retirement Income Review Final Report.

October 2020:

2020-21 Budget includes the Your Future, Your Super package and confirmed the deferral of the start date of the Retirement Income Covenant to 1 July 2022

July 2020:

The Government announced the deferral of the start date of the Retirement Income Covenant to 1 July 2022

The Retirement Income Review report has been handed to government. There has been no announcement as to when it might be released to the public.

May 2020:

The Government announced that it will defer the introduction of the Retirement Income Covenant, previously scheduled to commence on 1 July 2020. A revised date will be determined following further consultation.

ASIC announced the deferral of the design and distribution obligations from 5 April 2021 until 5 October 2021.

March 2020:

The Coronavirus Economic Response Package Omnibus Bill 2020 included made amendments to the Superannuation Industry (Supervision) Regulations 1994 to provide pensioners with account-based pensions with flexibility. The amendments adjust their minimum draw down thresholds by 50% in the current and next financial year (as occurred during the global financial crisis) to enable members to avoid mandatory sell down of investments during the period of significant market downturn.

Treasury has amended the social security deeming rates. On 12 March, it announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates. It has subsequently announced that it will reduce these rates by another 0.25 percentage points. As of 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate will be 0.25%.

Treasury released the Treasury Laws Amendment Bill 2020: Improving Flexibility for Older Australian for consultation. The Bill gives effect to the measure first announced in the 2019/20 Budget to provide Australians over 65 with greater flexibility in making voluntary superannuation contributions (concessional and non-concessional) from 1 July 2020.

January 2020:

APRA Superannuation Prudential Standard SPS 515 requires super funds, from 1 January 2020, to design and  undertake the first ‘member outcomes’ assessment and set strategic objectives to improve those outcomes.  In APRA’s view, relying solely on net returns as a measure of outcomes, whether on a relative or absolute basis, is not sufficient.  RSE licensees would be expected to take a multi-faceted approach, incorporating both financial and non-financial outcomes for different cohorts, and considering both historic and forward-looking analysis.

July 2019:

Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018 included new means test rules for lifetime income streams with effect from 1 July 2019.

Dec 2018:

Retirement Income Disclosure Consultation. This consultation proposes a standardized, simplified document that outlines key metrics and features to help consumers compare different retirement income products.  The supporting paper from the Australian Government Actuary proposes a specific income risk measure to inform the level of product risk and places products on a spectrum in a similar way to investment risk profiling methodologies.

May 2018:

Treasury’s Retirement Income Covenant Position Paper.  Outlines the principles the Government proposes as part of a retirement income covenant in the SIS Act, which will require superannuation trustees to develop a retirement income strategy for their members.

Fact Sheet 3.4 from Budget 2017-18 announced that

A retirement income covenant will be introduced in the SIS Act 1993, requiring trustees to develop a strategy that will help members achieve their retirement income objectives and focus on providing a higher standard of living for retirees. The covenant will require trustees to offer Comprehensive Income Products for Retirement (CIPRs) that provide income for life, no matter how long they live.

The government will formulate a new approach to retirement income product disclosure rules that require providers to report simplified, standardized information on retirement income products

From 1 July 2019 new Age Pension means testing rules will be introduced that only assess 60% of pooled lifetime product payments and purchase price[1] towards the income test and assets test

1 July 2017:

Treasury Laws Amendment (Innovative Superannuation Income Streams) Regulations 2017 amended a number of regulations to enable superannuation trustees to provide new innovative retirement income stream products to their member

Nov 2016:

Superannuation (Objective) Bill 2016 drafted.  States that “the primary objective of the superannuation system is to provide income in retirement to substitute or supplement the age pension.

May 2016:

The government accepted the “Review of retirement income stream regulation” recommendation to remove the barriers to innovation in retirement income stream products – by extending the tax exemption on earnings in the retirement phase to products such as deferred lifetime annuities and group self-annuitisation products

Oct 2015:

The government response to the FSI set out distinct strategic priorities to deal with these challenges including a commitment to improve the efficiency and operation of the superannuation system and to boost retirement incomes.  The government committed to:

Enshrine the objective of superannuation in legislation

Improve retirement income products by removing impediments to their development

July 2014:

Optimum Pensions' new Real Lifetime Pension may be delivered by Super
Funds to their members to address Australians' longevity risk while providing
higher performance than current lifetime annuities in the market.