SMSFA welcomes retirement income covenant

The SMSF Association has welcomed the introduction of the retirement income covenant but say it must not create administrative burden or added costs.

Responding to a position paper from Treasury, the association said it welcomed the move to increase member engagement and help members plan for their retirement.

However, it wanted Treasury to ensure any measures implemented were practical and fit for purpose and consideration was given regarding the size of self-managed superannuation (SMSFs) compared to large super funds.

Chief executive, John Maroney, said he was also aware of the changes that had been implemented in the investment covenant and that these should be heeded with the retirement income one.

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“For SMSF trustees there does appear to be an element of overlap between the proposed retirement income covenant and the investment strategy covenant on investment composition and risk and having to address some of these concepts separately may cause confusion or duplication,” Maroney said.

“We appreciate the policy intent, but are of the view, that including, for example, the longevity and risk consideration alongside a robust investment strategy, could accomplish this objective.”

A further problem related to auditors and whether the covenant would mean they would now have an extra role in auditing a trustee’s compliance with the covenant.