The Retirement Income Covenant aimed to promote choice and competition in the retirement phase of superannuation and for superannuation trustees to have a retirement income strategy that outlined how they planned to assist members in retirement.
This included maximising retirement income, managing risks and having flexible access to savings.
Speaking at an industry event, Stephen Jones MP, shadow minister for financial services and superannuation, said advice was crucial to the covenant’s success.
Jones said: “Unless the advice piece gets fixed, the Retirement Income Covenant will fail. Because people will not adopt strategies for which they are unfamiliar unless they have the confidence of someone they trust who says ‘this is the best way for you to deal with your retirement nest egg’. It will fail until that advice piece is fixed.
“I’m intensely uncomfortable with a model that looks like that. It would be naïve for us to think that the stuff exposed by the Hayne Royal Commission was only a problem that could ever just be subject to one part of the industry, so we need to send a clear message to me that we need to get the advice model right and the traditional advice models aren’t working anymore.”
The superannuation industry was now over $3 trillion in size but Jones said more effort needed to put into the retirement phase, the same way focus had been given to the accumulation phase.
