Advice in super now added to Treasury’s advice review

Mike Taylor

Managing Editor and Publisher

7 February 2022

Yet another task has been added to Treasury’s quality of advice review – the possible extension of intra-fund advice in the context of the Retirement Incomes Covenant.

A bipartisan report by the Senate Economics Legislation Committee effectively kicked the can down the road on the boundaries between forms advice under the Retirement Income Covenant, recommending that the issue become part of Treasury’s broader inquiry.

While expressing confidence that superannuation funds could deliver on their obligations under the Retirement Income Covenant without stepping into the more complex area of personal advice, the committee then referenced the issue being handled by Treasury.

What was clear in the committee report was that both sides of politics believed the industry wanted a Retirement Income Covenant inserted into the Superannuation Industry (Supervision) Act (SIS Act) and believe the legislation should be passed without delay.

“The committee is supportive of the intent of the covenant to better develop the retirement phase of superannuation and the principles-based requirements of the covenant for superannuation trustees to formulate, review regularly and give effect to a retirement income strategy for beneficiaries approaching or who are in retirement,” the committee’s final report said.

“Regarding issues raised by submitters when formulating and giving effect to their strategy, the committee is confident that trustees can fulfil the requirements of the covenant and create effective retirement income strategies without providing financial advice or breaching anti-hawking laws.”

“Further, the committee understands that Treasury’s Review of the quality of financial advice consultation process will explore the issue of whether financial advice concepts could be simplified.”