The federal government has deferred the introduction of the retirement income covenant, which had been scheduled to commence on 1 July.
The government stated the deferral was necessary to allow consultation and legislative drafting of the covenant to take place following the COVID-19 pandemic.
“Superannuation laws currently require trustees to formulate, review and give effect to investment, risk management and insurance strategies. The purpose of the retirement income covenant is to establish an additional obligation for trustees to formulate a retirement income strategy for their members,” it said.
The deferral will also allow the Retirement Income Review to be included in the drafting of the covenant, it noted. The independent panel undertaking the review is expected to provide its final report to the government in June.
Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume said: “We’ve been working for some time on a retirement income covenant. While efficient accumulation is imperative and we are steadily chipping away at the inefficiencies of that part of the system, we need to build a smoother transition from the accumulation to the de-accumulation phase.
“Of course, there is nothing stopping funds and their trustees from developing retirement income strategies now and we’d encourage them to do so. Trustees don’t need to wait for us to legislate the covenant.”
In February, Heffron executive director Martin Heffron said retirement income outcomes would continue to be held hostage to future general election cycles unless the retirement income system was given clarity of purpose.
Earlier this year, SMSF Association chief executive John Maroney pointed out SMSFs were responsible for a significant portion of the retirement income system and should be given due consideration in the upcoming review.