FSC takes initiative setting RIC benchmark

The Financial Services Council (FSC) has sought to take the lead on setting a framework for superannuation funds meeting their obligations to the Government’s Retirement Income Covenant by publishing a framework which it says can act as a benchmark.

According to FSC chief executive, Blake Briggs the framework will be a benchmark for the industry to measure itself against to ensure superannuation funds are serving members in the best way possible.

“It outlines what a good versus a mature superannuation fund with a retirement proposition should offer to their members,” he said.

In delivering the framework, the FSC worked with NMG Consulting with the resultant document defining member cohnorts, “what good looks like” and success measures.

According to the FSC the framework is anchored around four fundamental principles:

1. Retirement is a service, not just a product proposition. Retirement strategies must consider engagement, education and advice in tandem with financial products.
2. Retirement is individual. Household finances and individual goals drive retirement needs.
3. Start early. Retirement strategies must consider member needs on a whole-of-life basis, starting with early engagement.
4. Keep it simple. The focus should be on providing the right level of support and guidance and simplifying the experience for members.

“Our framework demonstrates that a trustee’s strategy should involve tailored engagement with superannuation fund members based on their life stage and the information the trustee readily has about them,” Briggs said. “Superannuation funds should have this engagement from the day a member gets their first superannuation contribution, across the lifecycle, to maximise retirement outcomes when a person finally retires.”

“The default-heavy design of Australia’s superannuation system is having the unintended consequence of allowing people to be disengaged, especially as they near retirement, when the stakes are highest.

“Ultimately everyone’s needs and goals are different, and best practice involves superannuation funds facilitating access to personal financial advice. A one-size-fits-all approach often falls short of giving people the flexibility and support they need to get the most out of their superannuation,” Briggs said.