Govt canvasses including SMSFs in Retirement Income Covenant
The Federal Government is canvassing including self-managed superannuation funds (SMSFs) in the retirement income covenant.
A new discussion paper released by the Federal Treasury has canvassed the inclusion of SMSFs in the covenant and has asked what approaches might be taken and what barriers need to be removed.
The discussion paper points out that self-managed superannuation fund trustees face the same challenges as large superannuation funds in terms of complex risks and decisions.
“SMSFs constitute a significant component of the superannuation pool, making up 26% of all superannuation assets at 1.1 million members as at June 2022.15,” it said.
“While SMSF members are encouraged to consider their long-term retirement income requirements, they do not receive the same entitlement to support that members of APRA-regulated funds receive under the retirement income covenant. There is no safeguard that they will receive an equivalent level of guidance, risk management, or retirement income product solutions.”
“In addition, SMSFs may face unique challenges in retirement, including a need for exit planning in the event of the member-trustee becoming unable to manage the fund at older ages or due to the death of a member of the fund who undertook management responsibilities.”