APRA, ASIC uncover gaps in how superannuation fund trustees are approaching the retirement income covenant

An initial 12-month review of the Federal Government’s retirement income covenant has found super funds are leaving much to be desired when it comes to formulating appropriate strategies for members. That’s according to a join review conducted by the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission published on Tuesday, which examined the progress of 15 trustees collectively responsible for 16 industry, retail, corporate and public sector funds representing about half of accounts held by Australians aged 45 and above. While the review found trustees had begun to improve assistance to retired members, it did uncover “variability” in their approaches. Most were found to have had “very few plans” to address knowledge gaps about their clients’ needs, others were described as not using appropriate metrics to track whether members needed assistance, and many had not integrated retirement income strategies with their overall business plans. APRA deputy chair Margaret Cole said that, with Australian Bureau of Statistics data showing 3 million Australians will be eligible to make withdrawals from their super accounts in the next decade, people should be able to rely on their fund for assistance. “Some trustees have made a good start, but overall there has been a lack of progress and insufficient urgency,” she said. “As more members approach retirement, trustees must step up and deliver both well-considered strategies and action to support members in retirement.” ASIC commissioner Danielle Press said it was incumbent on trustees, as the managers of Australians’ retirement income, to get must get basics right. “[T]heir retirement income strategies must be designed with consumer needs in mind and be evidence-based,” she said. “They need to be mindful that their members’ needs evolve over time and commit to continuously monitoring and improving their approach.”