And now the good news - SMSFs not to be subject to the Retirement Income Covenant

Only a few months ago, the Government was proposing that trustees of Self Managed Superannuation Funds (SMSFs) were to be subject to a retirement income covenant, which would require the trustee to have a strategy that outlines how the trustees plan to assist their members to balance three objectives; namely maximising their retirement income, managing risks and having flexibility to access super savings.

Submissions were invited and SUPERCentral’s lawyers, Townsends Business and Corporate Lawyers, lodged a submission which forcefully argued that the retirement strategy covenant should not (and could not sensibly) apply to SMSFs.  We understand other submissions were also lodged questioning the utility of applying the covenant to SMSFs.

Thankfully, the Government seems to have considered and accepted those submissions.  In the exposure draft of the proposed legislation to implement the covenant, SMSFs are excluded from its operation.  This is good news.  It is extremely difficult to understand what benefit would arise to SMSF members from this covenant.

The covenant will apply to industry superannuation funds, retail superannuation funds and corporate superannuation funds from the proposed commencement date of 1 July 2022.

For any further information regarding this article please call SUPERCentral on 02 8296 6266 or email info@supercentral.com.au.