Chalmers links retirement reforms to DBFO

Addressing the Association of Superannuation Funds of Australia (ASFA) conference on Wednesday, Treasurer Jim Chalmers revealed the government’s response to its retirement phase consultation.

The response aims to put as strong of a policy and product focus on the retirement phase as there is on the accumulation phase, outlining four “critical areas” that Chalmers said would strengthen retirement outcomes: enhanced independent guidance, better retirement products, best practice principles, and increased transparency.

The details included an expanded Moneysmart website and an ASIC-led consumer education campaign to raise awareness among people approaching retirement and in retirement, along with “improving the innovative income stream regulations and supporting more innovation in retirement products”.

The best practice principles are set to be voluntary, however the Treasurer said they will guide the superannuation industry in designing “modern, high-quality income products that support Australians’ financial security in retirement”.

The focus on transparency, meanwhile, will take the form of a new reporting framework on retirement outcomes commencing in 2027, while APRA and ASIC have been tasked with a Pulse Check report by the end of 2025, aiming to track trustees’ progress implementing their strategies to meet obligations under the Retirement Income Covenant.

Importantly, Chalmers told attendees that these reforms will work in tandem with the government’s Delivering Better Financial Outcomes (DBFO) package, and that it would consult on the changes in detail next year.

Exactly how they will be linked is yet to be explained, however the Financial Services Council (FSC) urged the government to remember that “no two retirements are the same”.

“The FSC looks forward to working with Treasury on its outlined scope of work in relation to the retirement phase of superannuation, including the development of voluntary best practice principles which could help trustees fulfill their Retirement Income Covenant obligations,” FSC chief executive

“As these principles are developed, it is important they recognise the range of consumers’ needs in retirement and diversity of retirement products. For Australians, no two retirements are the same.

“Product features are only one aspect of ensuring good retirement outcomes. A good offering should also encompass the services the fund offers, such as guidance and financial advice, and how the fund’s service levels deliver for customers.”

The Council of Australian Life Insurers (CALI), meanwhile, reiterated its calls for further investment to give Australians more access to information about retirement.

“Australia’s life insurers have long been pushing for these improvements because they’re critical to helping people make the right decisions for them about how to finance their retirement,” said CALI CEO Christine Cupitt.

She also argued that the reforms should indeed be linked closely with the DBFO reforms, specifically the ability for institutions to employ the proposed new class of adviser to provide “simple advice at no extra cost” to the consumer.

“Australia’s life insurers want to support Australians to make informed choices about their future and help them live in a healthy, confident and secure way over their lifetime - including when they decide to retire,” Cupitt added.

This followed her telling ifa on Wednesday that CALI views the reforms as about “providing basic customer service”.

It wasn’t just associations pointing to the importance of viewing the retirement reforms in the context of advice and the DBFO reforms, with AMP CEO Alexis George arguing building the “financial confidence of Australia's growing number of retirees is one of the most important socio-economic challenges we face”.

“Building the financial confidence of retirees will be achieved through a combination of improved financial literacy levels starting from high school through to retirement, simplifying our retirement and age pension system, increased access to affordable financial advice, and more innovative solutions which unlock equity from the family home and provide greater assurance on lifetime income,” George said.

Meanwhile, an MLC spokesperson said that the insurer urges the government to “prioritise the DBFO reforms to enable more Australians to access financial advice”.

The announcement comes hot on the heels of Financial Services Minister Stephen Jones assuring advisers that a draft bill for the second tranche of DBFO reforms was imminent and that it would receive “broad support”.

“We are going to bring a bill forward, which is in public interest, which is ensuring that we have safe, reliable, affordable advice, which ensures that the financial advice profession can flourish, which ensures that funds can provide safe and simple information and advice to their members, which deals with the legitimate interests [of] every group, but most importantly and the most important group in all this is everyday Australians who are currently locked out of affordable advice,” Jones said on Tuesday.