The government has delayed legislation to introduce a retirement income covenant for the new financial year, arguing the issue requires “further consultation” in light of the COVID-19 crisis.
In a statement released on Friday, assistant minister for superannuation, financial services and financial technology Jane Hume said the retirement income covenant, previously scheduled to commence on 1 July would be deferred “to allow continued consultation and legislative drafting to take place following the coronavirus crisis”.
“Superannuation laws currently require trustees to formulate, review and give effect to investment, risk management and insurance strategies,” Ms Hume said.
“The purpose of the Retirement Income Covenant is to establish an additional obligation for trustees to formulate a retirement income strategy for their members.”
Ms Hume added that the delay to the legislation would also allow it to be informed by the results of the forthcoming Retirement Income Review, which reports suggested had been delayed by a month as a result of the pandemic.
However, when approached for comment around the possible delays last week a Treasury spokesperson told ifa that “work is continuing on the Retirement Income Review”.
Ms Hume said the revised date for the covenant legislation would be “determined following further consultation”, but there was “nothing stopping funds and their trustees” from developing strategies focusing on members’ transition to the decumulation phase.
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