Treasurer Jim Chalmers has unveiled an extensive suite of policy reforms targeting the retirement phase of superannuation, including a legislative change that will allow funds to provide new retirement product features like money back guarantee.
In a pre-recorded speech to the ASFA Conference on Wednesday, Chalmers said the new reforms will help give retirees peace of mind and provide more support to navigate retirement.
“Surely even our political opponents, who have been trying to undermine and diminish compulsory super whenever they can for partisan reasons, will see these changes as practical, pragmatic, and sensible and support them. We’ll see,” Chalmers said.
The treasurer said the new policies will complement the Delivering Better Financial Outcomes package reforming financial advice laws. “These changes build on the obligations introduced by the Retirement Income Covenant and work in tandem with the Government’s DBFO package,” he said.
The comments came as Minister of Financial Services Stephen Jones sought to play down suggestions that negotiations over the bill’s controversial second tranche had irrevocably stalled over a proposal to collectively charge super fund members for financial advice they may never receive.
One of the package’s four components is to revamp the existing innovative income stream regulations. Chalmers said the changes will allow funds to offer product features such as money back guarantees, purchases in instalments instead of an upfront lump-sum, and “fairer treatment” for couples by considering the joint life expectancy. The changes are expected to come into effect from 1 July 2026 after industry consultation.
Second, the government is looking to expand resources on the Moneysmart website, including tools for consumers to understand how income stream works fits into their expenses in retirement and different ways to draw down. These will be rolled out from the first half of 2025. ASIC will also release a consumer education campaign.
Third, the government will introduce a set of voluntary best practice principles to work in conjunction with the RIC. The aim of the principles is to “articulate the core characteristics of well-rounded retirement products that funds can draw on when developing their product offerings and strategies”, according to a Treasury fact sheet.
Fourth, a new transparency framework, named the Retirement Reporting Framework, will commence from 2027. APRA will collect and publish data on an annual basis but specific metrics and process will be determined via a Treasury-led public consultation next year.
APRA and ASIC will also undertake another Pulse Check report by the end of 2025 to monitor trustees’ progress with their retirement income strategy, which they are obligated to develop under RIC.
Treasury is set to develop the principles with an industry working group and the broader community, with a draft to be released for consultation next year.
‘Can always be better’
The retirement reforms follow a call for ideas on improving the retirement system late last year, which the treasurer has said received more than 100 submissions, although they were never published.
Chalmers opened up about the policy motivation behind the consultation in his foreword to the inaugural edition of Retirement Magazine, published in print last month and on the publication’s new digital hub page on Wednesday.
“With more Australians getting older and leaving the workforce, the focus is now shifting to how we can support people as they draw down on their super and retire with dignity,” Chalmers wrote.
“At the same time, Australians are living healthier, longer lives. This is a good thing but can make retirees understandably anxious about outliving their savings. One of the problems here is that most retirees do not have access to the appropriate products to help them maximise their super over their lifetime.
“That’s why we’ve been discussing with the super sector and community about how we can improve the retirement phase of super.”
He described the imminent reform package as “necessary” and the result of “consultation and collaboration” with industry. “Australia’s retirement income framework is the envy of the world,” Chalmers wrote. “But it can always be better.”
‘Kicking can down the road’
Lobby groups including ASFA, the Financial Services Council and Council of Australian Life Insurers issued press statements welcoming the reforms, as did industry leaders including AMP CEO Alexis George and Challenger CEO Nick Hamilton.
But consumer and policy advocacy groups argued the reforms did not go far enough to bring about much-needed change to the decumulation phase of super.
The Conexus Institute* executive director David Bell and research fellow Geoff Warren questioned if it would take too long for the policy effects to be felt by super funds.
“How will these initiatives nudge along the many super funds that are lagging in the development of their retirement income strategies?” Bell and Warren said in a joint statement.
“A complex system with complicated intertwining policies and entrenched agents guarantees slow progress unless brave cut-through policies are adopted.
“Hopefully we are proven wrong and these announcements – all of which are reasonable – are implemented in way that benefits super fund members soon rather than entrenching the current slow pace of development.”
Super Consumers Australia, meanwhile, said the best practice principles should be mandatory, not voluntary.
“It’s one thing for super funds to agree to best practice principles that they may voluntarily adhere to, but it is another thing for those best practice principles to result in good customer outcomes,” SCA deputy CEO and former APRA official Katrina Ellis said.
“We will engage with the consultation process to make sure this happens.”
The group also questioned why it would take APRA until 2027 to start publishing retirement-related data. The regulator has been collecting data on account-based pension investment returns and fees since 2021 but has not yet published it, it said.
“APRA has been sitting on the data to compare fees and historical returns in account-based pensions for several years,” Ellis said. “We don’t need to wait several more years, the data should be published now.”
Retirement Magazine is a new print and digital publication dedicated to the decumulation phase of superannuation. You can subscribe to its newsletter here.
*The Conexus Institute is a not-for-profit think tank philanthropically funded by Conexus Financial, the publisher of Professional Planner.
