Is a safe harbour option needed for MyRetirement?

A panel has questioned whether MyRetirement products need a safe harbour option if the current suggested framework is opt-in by both the trustee and superannuation fund member.

Speaking on a panel at the Financial Services Council (FSC) Leaders Summit on Wednesday, UniSuper independent director, Nicolette Rubinsztein said there were mixed views on having a safe harbour option for comprehensive income products in retirement (CIPRs).

“If you go with the safe harbour option it requires you to be very prescriptive. And then we would have wrapped ourselves in knots with a safe harbour option as you don’t want that level of prescription because we want more flexibility in trustees,” she said.

“If we do have one we need to go back to a principles-based approach. If we do have one, it would be more around the process rather than your product needs to look like ‘x’.”

Rubinsztein also noted that ultimately the MyRetirement product would have to be mandatory for trustees in the future.

“There will be a need to reframe it. There should be a period where it is optional but we will have to go through a lot of evolution,” she said.

“We also need to allow for a way of applying for an exemption for where it doesn’t make sense for a fund to need a longevity product as there will be cases where it’s not going to make sense.

“CIPRs should be framed as compulsory but funds should be allowed to apply for an exemption rather than it being an option.”

Also speaking on the panel, NAB general manager for corporate super, Lara Bourguignon, said there should not be one mandatory CIPR that all funds needed.

“The framework does need to have certain components where things are mandatory but we need to make sure we get it right so we don’t stifle innovation and put people into the wrong solution,” she said.