Superannuation funds have called for increased flexibility in the advice they are allowed to offer members, including helping them with their pension eligibility and home ownership.
Super funds are limited in how much advice they can offer, and are not allowed to cover non-superannuation assets, but the Australian Institute of Superannuation Trustees (AIST) is calling for that to change.
As part of its submission to the government’s proposed Retirement Income Covenant, AIST wants a provision included for an expansion of the advice funds are able to provide to members.
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AIST chief executive Eva Scheerlinck said that allowing super funds to provide advice on issues such as a couple’s retirement adequacy and Age Pension eligibility would lead to better retirement outcomes.
“Decisions about retirement income options can be among the most important super fund members will ever make,” Ms Scheerlinck said.
“Expanding intra-fund advice alongside the proposal for funds to develop a retirement income strategy would help ensure that members are provided with the most appropriate approach to their retirement income needs.”
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Under the current legislation, superannuation funds are not permitted to provide intra-fund advice on a household’s retirement adequacy, home ownership or other non-superannuation-related assets.
“We need to recognise that as many as half of all members seek pre-retirement advice as a couple or household rather than as individuals,” Ms Scheerlinck said.
“Allowing super funds to provide intra-fund advice on factors such as household assets and home-ownership is a natural fit with the retirement income covenant proposal.
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“Over many years intra-fund advice has provided limited advice very widely and successfully and expanding it to a broader range of retirement questions has the potential to benefit millions of Australians,” Ms Scheerlinck added.
Some of the other proposals included in AIST’s submission to the Retirement Income Covenant include a data-sharing arrangement with government agencies to help with implementing the new laws, safe harbour protection for super funds and for retirees to continue to have flexible access to their savings, including lump sums.
The AIST also says that any policy changes as part of the retirement income covenant must not undermine the benefits of letting retirees choose how they access their retirement balances.
“Many members are retiring with relatively modest balances, and they should not be precluded from accessing some or all of this as a lump sum,” the submission explains.
“Access to a lump sum may help retirees clear debt or … help them prepare for retirement aligned with their needs.”
While AIST supports the requirement for super funds to publish a summary of their retirement income strategy as part of the covenant, it says that the proposed requirement for trustees to make every determination made about their strategy public is unnecessarily onerous and should be removed.
It also says that the legislation should be amended to provide a flexible implementation period, where the requirement for a retirement income strategy would be voluntary for the first 12 months from 1 July 2022 and become mandatory on 1 July 2023.
Do you think superannuation funds should be able to offer a wider scope of retirement advice? Are you worried that the government’s retirement income covenant will force you to spend your superannuation savings? Why not share your thoughts in the comments section below?
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