Rice Warner has raised concerns that the Department of Treasury’s Retirement Income Covenant position paper currently allows super fund trustees to offer guidance on CIPR products without an AFSL.
The Treasury position paper outlines the government’s proposed retirement income framework, including the use of comprehensive income products for retirement (CIPRs).
In a submission to Treasury, Rice Warner said it was supportive of the Retirement Income Covenant, but flagged a number of potential problems with the “structure and implementation of the proposed CIPRs framework”.
One of the chief concerns raised was that under the current proposal, super fund trustees will be required to assist members by “providing guidance or intra-fund advice tools” to help members make informed choices regarding retirement income products.
“We are supportive of increased member engagement to assist members to better understand how they can meet their financial goals in retirement, however, we are concerned that the paper states that trustees could provide this guidance without financial advice,” the company said.
Rice Warner said this kind of guidance should legally fall under the AFSL regime and consideration of a member’s personal circumstances should be dealt with by the member, not the fund.
“We believe that providing guidance based on a member’s needs and preferences constitutes financial advice and would therefore need to be provided under an AFSL,” the company said.
“Further, the majority of members (about 70 per cent) have a partner at the time of retirement and their superannuation benefit, access to the age pension and the family’s other assets need to be taken into account.”
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