ISA leverages covenant to expand intra-fund advice

Industry Super Australia (ISA) has used the Government’s Retirement Income Covenant legislation to argue that the scope of intra-fund advice be expanded to include retirement income products.

In a submission filed with the Senate Economics Legislation Committee review of the Retirement Income Covenant bills, the industry funds body has also called on the Government to “explore the benefits of free, subsidised or low-cost advice on retirement planning.

What is more, it wants the anti-hawking provisions amended to assist superannuation funds in delivering retirement income products to members.

The submission states that “ISA recommends that intra-fund advice be expanded to include advice about retirement income products:

• which takes into account Age Pension eligibility, Centrelink payments, non-super assets and non-super income, and
• which covers the members household, i.e., spouse/partner of the member and, if applicable, dependant/s of the member.

“ISA encourages the Government to explore the benefits of free, subsidized or low-cost advice on retirement planning,” the submission said.

“ISA recommends that the government amend the exemption from the anti-hawking prohibition to ensure that it is broad enough to allow funds to offer retirement income products to members without breaching the prohibition.”

Going into greater detail about its intra-fund advice recommendation, the ISA submission said that the law prescribed the types of advice that could not be collectively charged.

“ASIC has given guidance on the types of non-ongoing advice for which a superannuation trustee is likely to be allowed to collectively charge,” it said. “The topics are narrow and do not take account of a members wider financial and household situation, or access to Centrelink payments.”

“Expanding intra-fund advice to include advice to members about retirement income strategies that take into account Age Pension eligibility, other Centrelink payments, non-super assets and non-super income, and which include the member’s household, would be an efficient and cost-effective way for members to receive trusted advice on retirement income strategies,” the submission said.

“ASIC adopted a similar approach in its COVID-19 measures to allow intra-fund advice on early release of super to extend to a member’s household. The Government can achieve a similar and permanent outcome by amending the law to expand the situations in which intra-fund advice can be given.”