Fund trustees know best on CIPRs says industry funds
Industry funds are calling for “safe harbour” arrangements around the delivery of Comprehensive Income Products in Retirement (CIPRs) if superannuation fund trustees are forced to implement specific products to their members.
In contrast to recent financial planning suggestions that a “safe harbour” approach to the new CIPR regime might prove counter-productive, the Australian Institute of Superannuation Trustees (AIST) is arguing that if funds are forced to implement specific products for their members as “preferred retirement products” safeguards will need to be implemented to minimise moral hazard.
The AIST submission argues that superannuation fund trustees have a role to play in ensuring that the most appropriate retirement income strategies and solutions are placed in front of their members.
“AIST believes that these can be wrapped up into a compact between trustees and members where a retirement incomes framework is designed by trustees with their members in mind,” it said.
“Trustees are in the best position to understand their members. They know what they are contributing and what their occupations are,” the submission said. “They have arranged insurance on their members’ behalf, looking into the risks presented by this pool of lives. They have built MySuper products that reflect their understanding of their members’ need for good net returns at an appropriate level of investment risk.”
The AIST said superannuation fund members did not want to have a retirement income stream placed before them which their trustees were explicitly recommending against.
“AIST recommends that trustees be responsible for determining what is in the best interests of their members,” it said.
The AIST said it believed further consultation was needed regarding the highly important matter of post-retirement and recommended immediate consultation with an industry-wide working group to take a longer-term holistic look at retirement income.
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