The Retirement Income Covenant's introduction to parliament yesterday has been welcomed by major industry bodies.
The Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 currently sits before the house, containing the long-awaited covenant that requires superannuation funds provide and regularly review a retirement income strategy for members who are retired or approaching retirement.
The Financial Services Council chief executive Sally Loane said the progress of the Retirement Income Covenant is strongly supported.
"There is an urgent need for the Retirement Income Covenant as a growing proportion of Australians move into retirement, and we encourage the parliament to pass the Bill without delay," she said.
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Association of Superannuation Funds of Australia deputy chief executive Glen McCrea said legislating the Retirement Income Covenant is a significant step in encouraging the further development of the retirement phase of superannuation and should assist members to be able to make informed decisions in retirement.
McCrea also urged the Parliament to pass the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021 to ensure that those workers who are paid less than $450 per month can receive superannuation.
"This will benefit 300,000 low-income Australians of whom approximately 63% are women," he said.
Super Consumers Australia director Xavier O'Halloran commented that the covenant will finally put the onus on funds to contemplate how best to maximise peoples' retirement incomes.
"Funds will be required to collect relevant data to help them understand their membership and use this to develop strategies and products that assist people to make the most of their retirement income," he said.
However, O'Halloran criticised the exclusion of self-managed super funds and their one million members under the legislation runs counter to the the Retirement Income Review's finding that there has been insufficient attention on assisting people to optimise their retirement income.
The federal government reintroduced the CCIV regime in the 2021-22 budget following a period of delay.
Assistant treasurer Michael Sukkar expects the CCIV regime to commence from 1 July 2022.
"Currently only around 5% of the $2.5 trillion in funds managed in Australia comes from overseas. The CCIV regime is designed to boost this figure, providing economies of scale to both domestic and foreign investors resulting in lower investment costs," he said.