Major consultancy KPMG has backed the development of a Retirement Incomes Covenant on the basis that development of a Retirement Income strategy is an appropriate obligation to impose on self-managed superannuation funds (SMSFs).
In a response to Treasury’s Retirement Income Covenant Position Paper, KPMG partners, Paul Howes and Adam Gee, specifically pointed to the need for SMSFs to be included in the regime, noting that they understand that the development of a Retirement Income strategy will be the only principle that will apply to a SMSF “which is an appropriate obligation to impose on an SMSF”.
The KPMG submission, while broadly supporting the Retirement Income Covenant, has urged the need for greater levels of clarity around what is intended and has cautioned that there may be a need to amend both the Superannuation Industry (Supervision) Act and the Corporations Act.
“We note that the Corporations Act with regards to advice provision requires that the advice provider (such as a trustee) determine and have regard to an individual’s objectives and needs,” it said.
“Whilst it is proposed in this paper that the covenant will ask the trustee to consider the needs and preferences, both require needs to be determined and trade-offs to be made in developing a member’s advance needs and their retirement income needs.”
“Whilst an ‘objective’ is different to a ‘preference’ we query whether use of different terms are on purpose (perhaps to differentiate the different requirements in the different Acts) or if this is an oversight,” the KPMG response said.
It then suggested that guidance tools proposed in the discussion paper risked breaching the Corporations Act.
