Senator Hume announced last Friday, 22 May 2020, that the Morrison Government will defer the introduction of the Retirement Income Covenant.
Scheduled to commence on 1 July 2020, the revised date of this important piece of legislation will be determined following further consultation.
This is understandable given the coronavirus and bushfires responses that Treasury has had to work on and the Retirement Income Review that is underway—it is important to Australia to get this right.
Maybe the Retirement Income Covenant would not have been necessary had superannuation funds not neglected to provide products that are in their best Interests of all their members, including those in retirement.
Many funds do want to do the right thing and are progressing delicately down the track to provide retirement product options. However, despite Senator Hume‘s comments that
…there is nothing stopping funds and their trustees from developing retirement income strategies now and we’d encourage them to do so. Trustees don’t need to wait for us to legislate the Covenant.”
almost all funds are waiting for the Government to legislate before making their full commitment.
The Government’s and Treasury’s position is reasonably clear. That is, superannuation funds need to have a retirement income strategy for their members which includes products that more efficiently manage longevity risk.
It should not need compulsion for Trustees to act in the best Interests of all their members. Isn’t this a requirement of The Superannuation Industry (Supervision) Act (the SIS Act 52(2)(c))?
See here for Senator Hume’s media release announcing the deferral.