Govt releases Retirement Income Covenant draft legislation

The Federal Government has released exposure draft legislation to introduce the Retirement Income Covenant, which will codify the obligation for superannuation trustees to have a retirement income strategy that outlines how they plan to assist their members in retirement.

The strategy must consider how the trustee would assist their members to balance maximising their retirement income, managing risks, and have some flexible access to savings.

Senator Jane Hume, minister for financial services, superannuation and the digital economy, said the legislation would give retirees the confidence to spend their super savings, while enabling choice and competition in the retirement phase of super.

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“The Retirement Income Covenant builds on the substantial reforms the Morrison Government has implemented to improve Australia’s retirement income system,” Hume said.

“These include the Your Future, Your Super reforms that are estimated to save Australian workers $17.9 billion over 10 years while ensuring the superannuation system works harder for all Australians, and reforms to improve the visibility of superannuation assets in family law proceedings.

“The Government also announced several measures in the 2021‑22 Budget, which increase superannuation coverage and provide Australians with improved flexibility to contribute to superannuation.”

Stakeholders were encouraged to provide their feedback and the consultation would close on 15 October, 2021.

Subject to the passage of the legislation, the covenant was expected take effect from 1 July, 2022.

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