SMSF Association Submission – Retirement Income Covenant position paper

SMSF Association Submission

The SMSF Association welcomes the opportunity to provide this submission in response to the
Government’s position paper for the proposed introduction of a retirement income covenant. The
Association welcomes measures that seek to increase member engagement with their superannuation and importantly planning for their retirement.

It is essential that any measures introduced are practical, fit for purpose and do not create
administrative burden or significant additional cost. These considerations are equally important
across all segments of the superannuation sector.

The proposed model, in practice, will not apply in a similar manner across the sector. This is a product of the nature, size and structuring differences that exist across the large APRA funds as compared to SMSFs. When drafting the legislation and any associated regulations, careful consideration will be needed as to how it will operate within the respective environments.

The large APRA funds have sizable pools of members which can readily be dealt with under the
proposed cohort model. The provision of general information and the preparation of a broad strategy is seemingly fit for purpose in this environment.

Issues emerge for SMSFs, given the nature of the structure and relationship between the trustee and
its members. The ability to formulate and give effect to a broad strategy, that is not intended to be
member specific or advice to members becomes problematic. How can they divorce themselves
from these two roles?

Retirement Income Covenant position paper

SMSF Association Submission