KPMG welcomes the release of the Retirement Income Covenant Position Paper (Position Paper) as it will help retirees gain the confidence to use their superannuation to provide higher retirement incomes that will improve their living standards in retirement.
As a leading professional services firm, KPMG Australia (KPMG) is committed to meeting the requirements of all our stakeholders – not only the organisations we audit and advise, but also employees, governments, regulators and the wider community. We strive to contribute to the debate that is shaping the future of the superannuation industry and we welcome the opportunity to provide a submission in response to the Position Paper.
Many retirees are not adequately supported to effectively manage their superannuation when they retire. Retirement involves multiple options and a level of complexity that makes it very challenging for retirees to make decisions on their own that will improve their standard of living in retirement.
The retirement income covenant should be a catalyst to innovate and transform the retirement phase of superannuation and spark the development of new and innovative retirement solutions that will challenge our thinking beyond the offer of conventional drawdown accounts.
Many Trustees have been actively designing and testing different retirement solutions for some time and there is an increasing level of development activity in the retirement sector. However, as recognised by the Position Paper, retirement involves difficult trade-offs, including complex interactions with other systems like tax, social security, aged care and housing.
The Position Paper outlines the objectives that need to be balanced in developing a retirement income strategy and encourages Trustees to provide guidance to their members to help them plan for a better retirement. We support and commend this approach in the form of the retirement income covenant.
However, there are several aspects of the proposal where further law reforms may need to be considered where Trustees are seeking to assist members in their retirement planning, especially where they are engaging with their members in a personalised and interactive way.
The following insights and findings from KPMG outline our support and highlight areas where clarification may be helpful, or further law reforms may assist Trustees to better meet the retirement needs of their members.
KPMG looks forward to continued engagement with the Australian Government as it develops its final policy approach to the Retirement Income Covenant.
