A confidential document circulated among super funds and industry bodies, and seen by ifa, outlines a set of voluntary best practice principles designed to ensure funds can keep pace with rising withdrawals.
The principles, building on current regulations, are divided into three key categories: deepening funds’ understanding of members’ needs, offering modern and tailored retirement products, and providing clearer information to help members make informed decisions.
“The overall objective of the principles is to provide guidance on voluntary best practice beyond those requirements set out in the covenant and broader trustee obligations,” the document reads.
“The principles are not exhaustive, and trustees may wish to develop and offer retirement income solutions that extend on the principles to provide exemplar product and service offerings to their members. The principles do not replace or vary trustee obligations under existing law,” it continues.
The most contentious aspect of the proposed principles is the push for longevity protection under the Providing quality retirement income solutions framework.
Essentially, super funds are being encouraged to embed longevity protection into retirement income plans for members with average balances over $200,000, with tailored drawdown pathways to help maximise their account-based pension component.
“A longevity protection product provides the member with a regular income for a number of years (fixed term) or for the rest of their life (lifetime),” the document reads.
“Common features may include regular payments that increase in line with inflation or in line with financial performance from a pool of assets.”
The financial services industry is viewing this as a reintroduction of annuity products and a move towards superannuation standardisation, which could reduce the level of choice for members.
Speaking to ifa, Naz Randeria, managing director of Reliance Auditing, said: “The government effectively want to reintroduce an annuity product – a defined benefit at the end of the day. Feels like a Putin measure.”
Luke Howarth, the shadow assistant treasurer, also raised concerns that Labor’s proposal could strip Australians of their choice in retirement planning.
Responding to the document, he told ifa: “As far as I’m concerned, when it comes to superannuation and retirement age, it’s all about choice. The individual choice of Australians, they should be able to take their super as one lump sum if they want and spend it how they wish.
“Treasury officials, super funds and government, shouldn’t legislate to lock in anything that doesn’t involve Australians having a choice in how they spend their own money.”
Remaining takeaways for funds
The proposed principles also urge funds to create three distinct retiree cohorts – including at ages 50–55, 65, and 67 – tailoring income solutions to meet the unique needs of each group. The document emphasises that all members approaching or in retirement should be classified into cohorts, ensuring more personalised and effective retirement outcomes.
Moreover, they are urged to boost clarity and support for members by, among other things, including retirement income estimates on member annual statements, and allowing access to easy-to-use digital tools. The guidelines also push funds to link members to financial advisers where a member requires assistance beyond the scope of the fund’s intra-fund advice offering.
Ultimately, according to the document, the principles are intended to “complement trustee obligations, and articulate a voluntary higher standard beyond those obligations, to support industry progress towards a clear understanding of best practice”.
Naz Randeria – Why would you say that “Introducing an annuity product” fells like a Putin measure? Surely a longevity/lifetime annuity type product is good for retirees? Please explain your comment.
“Feels like a Putin measure”. Turn it up, Naz!
Ray Charles can see that this isn’t about members.
My view is this about FUM retention for super trustees.
Can someone explain why we have a retirement system which features an enormous potential conflict of interest between super fund trustees, unions and legislators?
Unusual observation wouldn’t you think?
Sounds like it’s more about FUM retention, and in response Labor will have Industry Super funding their pet social projects.
this is about Tax revenue, to stop transfer of wealth to stop kids paying off their debt.
“….Deepening funds’ understanding of members’ needs”
In my opinion, this translates as:
[i]
Chances are members would prefer to spend their retirement funds in the future which reduces FUM, fees and control. [/i]
[i]That’s not good. So let’s come up with new approach and call it ‘tailored innovation.’
We’ll warn members that they might run out of money in retirement if they don’t listen to us. Remember, we are the experts, we know what’s good for them.[/i]
[i]’Tailored innovation’ enables retention of the member and the FUM, the fees and control…. Locked in forever.[/i]
No worries cobber.
Labor’s proposal to expand retirement income solutions, particularly longevity protection, is not inherently a bad thing. Giving Australians access to more annuity-style options is a positive development, allowing members to manage their capital consumption rate in a structured way over decades of retirement. More choice in retirement should be welcomed.
However, it’s important to view this through the broader context of industry super’s control agenda. The more retirement income options available, the more likely members will seek independent financial advice—and that is precisely what industry super funds want to prevent. This is where the funds retention strategy known as the New Class of Adviser (NCA) comes into play.
Industry super is not a “public service”; it is a dominant financial and political force that views professional advisers as its primary competition. The push for intra-fund advice, digital guidance, and now structured retirement income pathways all serve the same purpose: keeping members inside the system and blocking access to independent financial advisers who might recommend better strategies outside the fund.
The NCA was designed to ensure that members never develop relationships with professional advisers, maintaining industry super’s control over funds under management. While Minister Jones failed to deliver the tied sales force they wanted, the super lobby is relentless, and another push will come soon—likely from someone more competent.
Australians should have more retirement income options, but real choice requires real advice—not just a carefully curated pathway that keeps members locked in industry super’s grip.
I hate to be seen on the side of an argument with the Industry superfunds but annuities are de rigueur in the US. Have been for some time the preferred delivery of income in retirement. It may have something to do with the assessment by the US public that they’d prefer to know how much they’re getting paid each week for the next 20 years and not rely on the market while coping with inflation. Might put a few investment advisers out of work though.Set and forget folks!
But it’s obvious that what’s driving this move is that the industry super funds are watching FUM roll out the door and they don’t have a clip of the action.
The next step, is that the industry funds convince the government to stop our clients paying for premiums for risk cover in superannuation by rolling out FUM from their personal accumulation. Now that would cause mayhem with a certain few insurance companies who have up to 85% of their risk in super paid by rollovers.
Standby to repel boarders
Forget about a ban on risk premiums.
The real game is a ban on adviser fees coming out of super.
That’s what they want.
See if I’m wrong.
Yeah, 100% agree.
This year there is going to be focus on ‘Strategies that erode super balances”
Has been in my opinion something that consumer advocates have been pursuing for ages.
Guess who’s an ASIC Commissioner now.
Grab ya helmet, there’s a fight ahead.
Government provides guidance document “feels like Putin”
Government doesn’t “We don’t know what to do?!?”
Don’t forget that the Safe Harbour your licensee and the FSC demonises, were introduced because licensees cried over a lack of guidance.
Labor appeasing their union masters who own, run and gouge fees from industry super. With masses of Baby-Boomers & Gen X retiring, where most of the super wealth is, it means locking people into their fund annuity will ensure that Labor/union’s ‘rivers of gold’ continue to flow unhindered for more years.
“Client best interests”? If the unions can stay at the trough longer, how can it not be in the average workers’ best interests, comrade?
It’d be nice if people read the principles before commenting on them. The principles don’t mandate anything.
Principle 2.7. “Support direct member choice through the provision of tools, such as personas, that allow members to obtain a retirement income solution appropriate for their circumstances.”
Australians can use their retirement savings more effectively to achieve a better lifestyle in retirement. They need their super funds to provide income solutions in addition to account-based pensions to achieve better outcomes and they need their super funds to provide guidance, education and tools to help them implement the right combination of income solutions for their circumstances. The principles provide super funds some helpful guidance to do that.
Super funds are neither offering longevity solutions nor the guidance to combine longevity solutions with account-based pensions. If they don’t start, the government may end up mandating – just like they did with SuperStream. That won’t be in the interests of the super industry (retail or industry).
“Australians can use their retirement savings more effectively to achieve a better lifestyle in retirement. They need their super funds to provide income solutions in addition to account-based pensions to achieve better outcomes and they need their super funds to provide guidance, education and tools to help them implement the right combination of income solutions for their circumstances. The principles provide super funds some helpful guidance to do that.”
Sounds like Government control? Marxism? Always someone in Government who believes they know how better to manage someone else’s money right?
This is just the second step to stopping or limiting lump sums withdrawals. To prevent Industry super losing FUM and having to sell some of their overvalued unlisted assets at there real value. The first step was to legislate that ‘super is for retirement income’. The third step will be to stop lump sum withdrawals. Very cleaver really, playing a long game and its working, slipping it by us bit by bit and not coming out with the real objective.
Years and years and years of out performing (compare the pair) and at low fees normally comes with steak knives (or QANTAS Points ha ha)- but this pony has been going strong for a very long time if I am to believe the TV Ads? Typically, these type of investment schemes are all OK when the cashflow is positive – but when it become negative cashflow (Baby Boomers retiring) and assets need to be sold, that’s when the issues become real right – who is swimming naked etc? Perhaps that is why immigration levels are so high? I can’t remember voting for that policy?
Nothing new in high return investment schemes and always hard to convince people of the dangers of it – but it is all so very clear in the end and people will want to blame someone – I just hope the CSLR is not the scape goat – just the potential scale of this is terrifying?
And to think – the performance test seems to be pushing more and more concentration of funds?
No matter what rules they make, people will turn against against any system that seeks to control their money. is it any wonder why Centrally Controlled economies always tend to fail?
What was it Bill Kelty said (at a Labor Conference I believe) the aim of Super – control? Seems the FUM is important?
Super funds are neither offering longevity solutions nor the guidance to combine longevity solutions with account-based pensions.
Annuities are readily available.
They need their super funds to provide income solutions in addition to account-based pensions to achieve better outcomes and they need their super funds to provide guidance, education and tools to help them implement the right combination of income solutions for their circumstances. The principles provide super funds some helpful guidance to do that.
See a real Financial Adviser – who will act in the clients best interest. Should Super funds really be paying people to providing advice to members?
The principles are meaningless. Bureaucratic nonsense.
I just wish the Government or the people peddling the annuities can explain what problem they are trying to solve.
Is it that people are living too frugally in retirement and hoarding their savings in super for the next generation? Is it that people are taking their money out of super and spending it too quick and running out of money?
Is it a consumer led push or an industry/government led initiative?
I’m yet to see a single longevity product that was in the best interests of an individual retiree. So far the only ones I’d recommend it to were those who were incredibly nervous zero risk takers with no spouse or children.
Those types of people do not seek advice.
If they want advisers to recommend annuities, bring back 100% ATE for a lifetime pension. Otherwise go away. How is any client going to pay for their RAD if they tie their wealth up in lifetime [pensions with no withdraw ability but it’s still counted as an asset?
As an adviser all your doing is opening clients up to increased legislative risk.
The pot s too big for the government and unions not to focus how they can get their hands on it.
It’s be nice if your condescension was would back and your comments made through the lens of how government Treasury and industry funds have bastardised advise and gaslit out profession. Grow up and look at the quite clear vested interests. This is about protecting fum only and the products are subpar
Retirement should NOT be standardised. It should be personalised.
Another day another piece of collateral from Squealer telling the animals Mr Jones is coming and we all need Napoleon to “look after” our super. Disgusting, China has more flexibility in their retirement income innovation. Labor simply want to take our money and choice to fund industry funds long term because so many hnw retirees know an SMSF is more suitable.
ALP & Industry Super collude to have Back Packers sell Lifetime Annuities to lock up FUM in Industry Super and thus lock up Union & Bikie bosses revenue streams.
All backed by ALP Green Bonds and Unlisted Assets.
What could possibly go wrong here :-/
Scary ALP & Industry Super corrupted by the power of FUM, like Gollum, “My Precious” is the FUM
Over values the pool of assets and need to control the sell down do we? I thought defined benefits schemes were seen as too expensive when Accumulation Super was introduced? Seems now we have a situation where the individual now has the market risks in accumulation and if I am reading this correctly, will not be allowed access to their money apart from some drip feed system and no lump sums? Is this just a method to retain control of the capital?
Is this going to be an option are they forcing poor mum and dad retirees to sign up to these dodgy backroom deal annuities?
Won’t be any money left after everyone pulls their super out for a home deposit too.
Yep it is. Disgusting