The government’s Retirement Income Covenant (RIC) legislation has now come into effect, forcing super funds to have a retirement income strategy in place for their members.
Funds must now also publish a summary of their retirement income strategy on their website and were meant to do so before the RIC legislation came into effect on 1 July.
Commenting on the significant development, Financial Services Council CEO Blake Briggs said that Australians could now look forward to a brighter financial future in retirement.
“With an estimated 3.6 million Australians transitioning to retirement in the next decade, an entire generation of Australians are thinking about how their superannuation can help them live the next stage of their life with confidence and certainty,” he said.
“Superannuation funds are leading the charge by implementing a strategy for their members that best balances every retiree’s trilemma: maximising retirement income, with flexibility in how it is accessed and managing the associated risks.”
Previously, senior executives at super funds indicated that they were confident in meeting the 1 July deadline. However, product managers and those in charge of executing strategy plans were not so sure that their fund was ready.
1 July also marks 30 years since the introduction of the superannuation guarantee, under which the minimum contribution rate has now lifted to 10.5 per cent towards reaching 12 per cent by 2025.
“The introduction of the superannuation guarantee has been the driving force behind the transformation of Australia’s retirement system into one of the most successful and largest private pension systems in the world, managing $3.4 trillion in assets,” said Mr Briggs.
“In another 30 years, we will look back and see the introduction of the Retirement Income Covenant as an important step in making sure the superannuation system fulfils its promise of delivering a comfortable standard of living for Australians in their retirement.”
The Australian Institute of Superannuation Trustees (AIST) similarly paid tribute to compulsory universal super on its 30th anniversary and said that the super guarantee had resulted in a “world-class system” entrusted with the savings of millions of Australians.
“We should be very proud of what we have achieved as a progressive nation, building a superannuation system with almost universal worker coverage,” said AIST CEO Eva Scheerlinck.
“The industry too, can be proud of what it has delivered for super fund members over the last three decades, ensuring many Australians no longer have to rely solely on the age pension when they leave the workforce.”
Ms Scheerlinck also drew attention to the role played by unions, the contribution of pioneers and the role of the Hawke and Keating governments in making the super system what it is today.
“That we have the fifth largest pool of retirement savings in the world in the 14th largest economy, and stand as an example that other countries seek to emulate, is testimony to the success of our retirement savings model and the growth of the industry,” she said.
The AIST vowed to continue to advocate to improve the fairness, equity, adequacy, and transparency of the retirement savings system.
“This includes closing the gender gap that sees women retire, on average, with significantly lower super balances than men, and improving retirement outcomes for other lower paid workers and vulnerable people,” concluded Ms Scheerlinck.
