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, Savings.com.au 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 Savings.com.au.

"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. 


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

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.99% p.a.
7.00% p.a.
$2,659
Principal & Interest
Variable
$0
$230
70%
Featured
  • Available for Purchase and Refinance. No application fee and no settlement fee
  • No monthly, annual or ongoing fees
  • Access your SMSF loan via our easy-to-use online app Smart Money
6.99% p.a.
7.10% p.a.
$2,659
Principal & Interest
Variable
$0
$1,490
70%
7.24% p.a.
7.25% p.a.
$2,726
Principal & Interest
Variable
$0
$0
70%
7.25% p.a.
7.65% p.a.
$2,729
Principal & Interest
Variable
$30
$1,190
80%
7.39% p.a.
7.47% p.a.
$2,767
Principal & Interest
Variable
$0
$995
80%
7.55% p.a.
7.94% p.a.
$2,811
Principal & Interest
Variable
$395
$1,920
80%
7.49% p.a.
7.50% p.a.
$2,794
Principal & Interest
Variable
$0
$230
80%
Featured
  • Available for Purchase and Refinance
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Important Information and Comparison Rate Warning

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 be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. 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. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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