RIC implementation pathway outlined by regulators

8 March 2022
| By Liam Cormican |
image
image
expand image

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have issued a joint letter to all registrable superannuation entity (RSE) licensees on the implementation of the Retirement Income Covenant (RIC).

RSE licensees would be required to formulate a retirement income strategy by 1 July, 2022, following the Government’s introduction of the RIC through legislative amendments to the Superannuation Industry (Supervision) Act 1993.

“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,” the joint letter noted.

APRA and ASIC said they did not intend to issue detailed regulatory guidance on how RSE licensees should implement the RIC, instead time would be allowed for RSE licensees to drive their RIC strategic direction.

The regulators said there were several steps that a prudent RSE licensee would take to implement their RIC strategy outlined in the table below:

APRA and ASIC suggested RSE licensees embedded their RIC strategies in existing business planning and governance frameworks, risk management practices and controls, as well as by assessing the adequacy of resources to support the retirement phase.

“There may also be opportunities for RSE licensees to use their retirement income strategy to assist meeting other obligations, including the Design and Distribution Obligations,” they said.

Although the RIC did not require RSE licensees to develop or offer retirement income products, APRA and ASIC expected RSE licensees to consider making changes to any existing retirement income product offerings.

“A retirement income strategy may also include providing a range of assistance to members, such as developing specific drawdown patterns, providing budgeting tools or expenditure calculators, providing factual information about key retirement topics, and providing forecasts to beneficiaries during the accumulation phase about potential income in retirement,” the regulators said.

APRA’s consultation on how the RIC could be integrated into the superannuation prudential framework was expected to commence later this year.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 3 days ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 1 day ago

Having divested its advice business in August, AMP is undergoing restructuring in at least four other departments amid a cost simplification program....

2 weeks 5 days ago