ASIC has updated its guidance for superannuation calculators and retirement estimates, giving greater clarity to trustees about how they use them as part of their strategies under the Retirement Income Covenant.
Because the super calculators and retirement estimates could involve personal financial advice ASIC had given class order relief from Australian financial services licensing and personal advice requirements in the Corporations Act for providers of these tools.
The treatment of estimates and calculators in advice law is uncertain, but the Retirement Income Covenant has directed trustees to provide guidance on a large-scale basis.
The RIC required superannuation trustees to produce a retirement income strategy by the start of this financial year.
Forecast providers can rely on the old or new guidance for the next six months after which the new guidance will be the only source of truth.
The intention of the super calculators and retirement estimates are meant to be low-cost forecasting tools for consumers to review their financial situation and seek out advice if needed.
To rely on ASIC’s relief, providers must comply with the conditions set out in the legislative instruments including not promoting specific products.
ASIC commissioner Danielle Press said the updated relief will provide greater flexibility in how trustees can give retirement estimates to their members.
“It introduces a single framework for setting economic and financial assumptions across both retirement estimates and superannuation calculators,” Press said in a media release. “We expect trustees that choose to provide these tools to do so in a way that fosters informed decision making by members, without promoting specific financial products.”
Accumulation versus retirement
How the calculators work varies depending on whether the user is a retiree or pre-retiree.
A trustee may give a static retirement estimate to a member who is in the accumulation phase under our relief, but not to a member who holds a superannuation product in the retirement phase.
ASIC stated in the guidance it believes it can be misleading to give static retirement estimates to members in the retirement phase because the member would not be able to input or change the assumptions to better match their current personal circumstances.