Tag Archives: CIPR

Retirement income covenant considerations for Australia’s superannuation system

The riddle of the superannuation system is that the needs of workers saving for retirement are relatively simple while the needs of retirees are incredibly complex. Those saving for retirement want to generate the highest long-term investment returns within certain tolerances for risk. Retirees want to generate the highest lifetime income possible with both certainty and flexibility.

Super fund trustees will soon need to balance these competing objectives thanks to a proposed Retirement Income Covenant. This covenant will codify their requirements and obligations to improve retirement outcomes for members.

The challenge for super fund trustees centres on Comprehensive Income Products for Retirement. Funds must take care in constructing a retirement income strategy, especially one that focusses on the “collective needs of members” as described in the covenant position paper.

To read more about the challenges facing trustees as they begin to grapple with the proposed Retirement Income Covenant, see this article by Milliman’s Jeff Gebler and Adam Shao.