The legislation will take effect next month.
The incoming retirement income covenant (RIC) won’t prevent registrable superannuation entity (RSE) licensees from offering financial product advice, ASIC has confirmed.
In a new joint set of frequently asked questions (FAQs) alongside APRA on the implementation of the RIC – which will require superannuation trustees to plan and outline a retirement strategy for members – the corporate regulator confirmed that the strategy can cover the provision of financial product advice.
“While an RSE licensee is not required to offer financial product advice as part of its retirement income strategy, the retirement income covenant does not prevent the RSE licensee from offering financial product advice (including personal advice), so long as the RSE licensee (or the entity providing the advice) is licensed to provide the advice, and is operating within the existing financial advice framework,” ASIC said.
In the FAQs, APRA also confirmed that while licensees are required to formulate a strategy, it “will not be providing feedback” on draft strategies.
However, APRA and ASIC intend to commence a review of RSE licensees' implementation of the new requirements during the 2022-23 financial year.
On a recent episode of the ifa Show podcast, Challenger general manager of retail distribution, Luke Cheetham, said the RIC will present a huge opportunity for financial advisers.
“We work in a highly complex retirement system and you couple that with a lack of understanding of the risk that many will face over a 20 to 30 year retirement, it really means that transitioning from work to retirement without the right guidance [and] without the right advice can be a really daunting prospect for many,” Mr Cheetham said.
Listen to the full podcast with Mr Cheetham here.
Meanwhile, in a dialogue paper released in April, the Actuaries Institute said the legislation has an opportunity to improve the living standards of millions in retirement.
“Having a robust and effective retirement income system is crucial for the wellbeing of all Australians,” Actuaries Institute chief executive Elayne Grace said.
“The passage of changes to super legislation, to give effect to the retirement income covenant, was a significant milestone in providing retirees with a reliable, secure and adequate income, with the aim of enabling retirees to live with dignity in retirement.”
The RIC will take effect from 1 July 2022.
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
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