On Mon 27.9.2021 Treasury released the Exposure Draft – Treasury Laws Amendment (Measures for a later sitting) Bill 2021: Retirement income covenant. The Draft Bill will insert a new covenant in the SIS Act to require trustees of a registrable superannuation entity (RSE) to develop a retirement income strategy for beneficiaries who are retired or are approaching retirement. Note that the Treasury position paper for this 2018-19 Budget measure had proposed for the covenant to apply for all trustees, but the Draft Bill will not apply to trustees of self-managed superannuation funds (SMSFs).
SUBMISSIONS are due by 15 October 2021. DATE OF EFFECT: 1 July 2022.
[Treasury website: Consultation Page, Draft Bill, Explanatory Materials; LTN 186 27/9/21]
The SMSF Association has welcomed the exclusion of SMSF trustees from the proposed retirement income strategy covenant. While it was originally intended that the covenant would apply to all super trustees, the Draft Bill will not apply to SMSFs and instead only require RSE trustees to develop a retirement income strategy for members.
The SMSF Association reminded SMSF trustees that it is still important to ensure members are covered by a strategy that balances the objectives of maximising a member’s expected retirement income, managing the expected risks and providing flexibility to access capital required during retirement. “Just because the law doesn’t require you to have a retirement income strategy, doesn’t mean you shouldn’t have one”, said SMSF Association CEO, John Maroney. [KTN 188, 29/9/21]
[Tax Month – September 2021] 28.9.21