Australia Banking Regulators to Review Superannuation Funds Retirement Income Strategies, A$750 Billion of Savings from 3.6 Million Retirees in Next Decade
18th August 2022 | Hong Kong
Australia’s banking & company regulator are reviewing Australia superannuation fund’s retirement income strategies with an estimated total of A$750 billion ($520 billion, AUDUSD 0.69) savings from 3.6 million retirees in the next decade (2030 to 2039). Australia Superannuation (or ‘super’) is a compulsory system of placing a minimum percentage of income into a fund to support financial needs in retirement, which is invested in a range of assets to help grow the balance to have the best possible retirement outcome. The Australia retirement income covenant (the covenant), which takes effect from 1 July 2022, had been introduced to the Superannuation Industry Supervision Act 1993 (SIS Act)m with licensees required to formulate a retirement income strategy (the strategy) and publish a summary of the strategy on the superannuation entity’s website by 1st July 2022. Australia is the 5th largest country by GDP in Asia-Pacific ($1.3 trillion) with population of more than 25.6 million. The top 5 largest countries in Asia-Pacific by GDP are GDP are China ($14.7 trillion), Japan ($5.4 trillion), India ($2.9 trillion), South Korea ($1.6 trillion) and Australia ($1.3 trillion). (GDP ~ Gross Domestic Product)
“ Australia Banking Regulators to Review Superannuation Funds Retirement Income Strategies, $750 Billion of Savings from 3.6 Million Retirees in Next Decade “
Australia Retirement Income Covenant
The retirement income covenant (the covenant), which takes effect from 1 July 2022, has been introduced to the Superannuation Industry Supervision Act 1993 (SIS Act).1RSE licensees are required to formulate a retirement income strategy (the strategy) and publish a summary of the strategy on the superannuation entity’s website by 1 July 2022. The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) expect implementation of the strategy to be subject to a continuous improvement process from 1 July 2022 onwards.
These legislative amendments are an important step in broadening industry focus beyond the accumulation phase to advance the decumulation, or retirement, phase of superannuation, and in encouraging RSE licensees to innovate to improve outcomes for their members in retirement. This letter outlines an indicative implementation pathway for RSE licensees to consider when embedding the covenant into their business operations, and communicates APRA’s and ASIC’s expectations of RSE licensees in implementing the covenant. Learn More: https://www.apra.gov.au/implementation-of-retirement-income-covenant
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