New tips from ASIC’s retirement calculator drive engagement
ASIC’s recent decision to update its guidance for superannuation calculators and superannuation estimates will allow funds to continue to provide basic superannuation projections in annual member statements and help members choose a retirement strategy under the Retirement Income Covenant.
The updated guidelines take into account both static and interactive calculators. Relief for the use of static calculators provides credit unions with a convenient way to include basic retirement income projections in member statements, which drives member engagement and supports accumulation balance reframing to retirement income.
Meanwhile, interactive retirement calculators are considered an important part of most superfunds’ retirement income strategies, providing low-cost forecasting tools for clients to review and explore their financial situation and seek advice if necessary.
Calculators have been identified by many funds as having an important role to play in determining retirement solutions given the high cost and limited availability of financial advisors. ASIC’s work on interactive calculators is important because many assumptions can be determined by the fund, such as investment returns and, importantly, multiple product types. Calculators give members a tool to explore this in detail.
Under the Retirement Income Covenant, which took effect July 1, pension trustees are required to design retirement income strategies. The new legislation aims to extend the focus of superfunds beyond the accumulation phase to the retirement phase and to encourage funds to provide a coordinated focus and product strategy to support their members in retirement. This is particularly relevant given Australia’s aging population.
Class Order Relief
ASIC gave exemption from class order Australian financial services and personal advice licensing requirements in the Ac companiest for providers of these tools because super calculators and retirement may involve personalized advice.
Under the ASIC relief, a fiduciary can give a static retirement estimate to a member in the accumulation phase, but not to a member investing in a retirement product in the retirement phase. Vendors must not promote specific products in order to rely on the relief.
“We expect trustees who choose to provide these tools to do so in a way that promotes informed decision-making by members, without promoting specific financial products,” ASIC Commissioner Danielle said. Press, in a press release.