Retirement income covenant to force Aussies to spend their super

author-avatar By on September 29, 2021
Retirement income covenant to force Aussies to spend their super

The Federal Government has released details of its plan to prevent retirees dying with most of their wealth still available.

The government's Retirement Income Covenant aims to promote retirees spending their superannuation savings, but the new plan excludes those who have self-managed super funds (SMSFs)

The new law from 1 July next year would require super funds to include an income and spending strategy for beneficiaries to maximise their super spending in retirement. 

The retirement income strategy would provide assistance to members with managing their spending in retirement and combat the issue of retirees not spending their wealth. 

Superannuation Minister Jane Hume said that the reforms would improve the retirement income system. 

"The draft legislation would codify the obligation for superannuation trustees to have a retirement income strategy that outlines how they plan to assist their members in retirement," Ms Hume said.

"The strategy must consider how the trustee will assist their members to balance maximising their retirement income, managing risks, and have some flexible access to savings."

In July, spoke to National Seniors Australia chief advocate Ian Henschke, who was sceptical about the Retirement Income Covenant's findings that retirees died holding on to most of their wealth.

He said that the priority should be to talk to older Australians to find out why they may be conservative with their savings. 

"We know that many of our members are worried about health and aged care costs," Mr Henschke told

"We found that they are holding money for home care, and to care for their partner - their spouse."

So why aren't SMSFs included in the proposal?

The latest Retirement Income Covenant update released Monday makes trustees of SMSFs exempt from the new spending strategy requirements.

The inclusion of SMSFs in the initial plan raised questions as to how this benefited SMSFs and some experts believed that it simply was more red tape for SMSF trustees.

There was also the question as to how SMSFs with multiple members would be impacted by how much they could spread the assets of their fund.  

SMSF trustees are required to annually update their investment strategy, which is a written document overseen by an auditor.

Self-managed super has been on the rise in Australia in recent years, accounting for 25.11% of assets in the Australian pension industry according to the ATO.

As of June this year, the SMSF sector includes $822 billion worth of assets, rising from $60.9 billion in 2000. 


Looking to take control of your retirement? This table below features SMSF loans with some of the most competitive interest rates on the market.

Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details


  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees


  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
FixedMore details

SMSF 80 Fixed 5 Years (Purchase) (New Customer)

VariableMore details

Liberty SuperCredit SMSF (LVR < 60%)

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given Rates correct as of October 23, 2021. View disclaimer.

Image by Angela Matijczak via Unsplash


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure,, Performance Drive and are part of the Firstmac Group. To read about how manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Aaron joined in 2021. He is a finance journalist with a keen interest in property, the share market, and improving financial literacy in young Australians.

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