The ‘chicken and egg’ factor in retirement product development

6 November 2023
| By Laura Dew |
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ASIC believes super funds face a “chicken and egg” situation when it comes to product development under the Retirement Income Covenant (RIC).

Speaking in the Senate Economics References Committee, ASIC superannuation and life insurance leader Jane Eccleston discussed the work it is doing with trustees on the RIC. 

This follows a joint thematic review on the RIC implementation by APRA and ASIC earlier this year which examined how funds are structuring their implementation approach and areas where they are falling short. 

There have been mixed responses to the RIC, she added, with some super funds being “much advanced” than others in their efforts. This is particularly the case when it comes to understanding member needs, designing fit-for-purpose assistance and their business planning strategy.

It is important for the regulators to conduct this review, she said, in order to ensure funds are acting correctly from the outset rather than conducting a retrospective review in five years’ time.

Eccleston said: “We thought it was very important to monitor the implementation, not just leave it up to the trustees and then come back in five years and think, ‘Hey, this isn’t where it should be.’ It is really trying to drive appropriate implementation practices. That was something that both ASIC and APRA felt very strongly about.”

As well as super funds, firms such as Allianz Retire+, Challenger and Generation Life have also developed retirement products.

Answering a question by Senator Jane Hume, Eccleston discussed the barriers towards designing retirement income products focused on member needs. 

She replied that there is a “wide range of issues” affecting development, which range from consumer literacy to product take-up.

“There are issues in terms of the business case. It is a bit of a chicken and egg situation. If you are not sure you are going to have a good take-up, can you actually invest in developing the product? There is that tension there. 

“There’s probably also a consumer education issue as well. These are products that in some instances lock in people for a very long time. They feel very uncomfortable with that. Depending on where the market is, they can look expensive if people don’t fully value the longevity protection. 

“So there are a whole range of barriers. I would say that some trustees have been developing products. People are watching and seeing how they are going to play out over time.”

Introduced in July 2022, the RIC requires super trustees to develop a retirement income strategy for their members to improve their financial outcomes in retirement. 

Super trustees have previously shared they are concerned that collecting too much data on their members could tip them into providing personal financial advice. 


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