A shiny new Intergenerational Report (IGR) is like Christmas for policy wonks. 

The IGR is one of the foundational documents that let you sense-check policy settings to see whether they will serve Australians over the long term, and consider the assumptions that the Government is making about the trajectory of the nation. 

The latest IGR, scheduled for 2020 but deferred due to the pandemic and released in June 2021, is notable for what it tells us about how much the future will be shaped by the impacts of COVID-19.  

For superannuation and retirement incomes policy, the IGR also shows the value of the work we do. Helping Australians save for their retirement takes pressure off the public purse as the population continues to age, and the report notes that “As younger generations retire with greater superannuation savings, the total proportion of older Australians receiving the age pension will continue to decline.”  

Considering this in the context of the Retirement Income Review’s finding that many individuals lack the level of guidance required to make high-quality decisions about managing their retirement balance, what stands out is the importance of appropriate support and guidance through the retirement process. 

It also hammers home the importance of the long-awaited Retirement Income Covenant (due to commence in 2022 but yet to be legislated) to elevate retirement to the same level as accumulation in the responsibilities of trustees. 

Too often, both industry and Government get stuck thinking about accumulation and retirement phases as two separate issues, when in fact they are just two sides of the same coin.  

By ensuring that all trustees are required consider the needs of their members through the retirement phase, we give retirement the same level of importance as accumulation - which is really the way it should be, if we agree that the point of superannuation is to actually use your savings in retirement. 

A principles-based, product-neutral Covenant will work alongside other consumer safeguards, like product Design and Distribution Obligations (DDO) and Member Outcomes Assessments to ensure that superannuation funds are delivering the best possible retirement outcomes for their members. 

This will be particularly important for retirees who lack access to comprehensive financial advice to plan their retirement. 

A covenant won’t solve anything on its own, and the lack of a Covenant hasn’t prevented a large number of funds from thinking about how they can more strategically manage the retirement phase for their members.  

However, a Covenant should provide the policy certainty for trustees and other product providers to kick-start innovation and think about new and better approaches to retirement incomes. 


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