The Retirement Income Covenant (the “Covenant”) came into effect on 1 July 2022, requiring superannuation funds to formulate a retirement income strategy (the “RIS”). The purpose of the RIS is to address how the fund will assist retirees in balancing key retirement objectives. The practical execution in line with the Covenant is beginning, with a number of new retirement income products and providers becoming available in the market, as well as a commitment from many funds to uplift their product suite and guidance offerings, including the use of digital tools.
This report introduces our Retirement Solutions Assessment Framework (the “Framework”) to assist superannuation funds that are seeking to explore available retirement solutions or to outsource a component of their retirement solutions in order to satisfy the fund’s obligation under the Covenant. The Framework comprises a structured set of value-weighted detailed considerations by which to compare and assess solution providers and their solutions. This can be used in a process similar to how funds seek to fulfil their group insurance obligations under APRA Prudential Standard SPS 250.
We would like to acknowledge TAL and other life insurers for their contribution in validating our modelling and assessment criteria for the insurance concepts referred to in this report.