RIC requires trustee to give general advice

Superannuation trustees can fulfill the requirement of the Retirement Income Covenant (RIC) and create effective retirement income strategies without providing personal advice, according to the covenant.

The RIC’s draft explanatory memorandum released on Monday outlined the strategy to be general in nature and the relationship with financial advice and other laws.

It said the retirement income strategy of a trustee needed to outline plans to assist beneficiaries covered by the strategy in generality.

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“It is expected that trustees will consider the broad needs of the beneficiaries covered by the strategy to determine what assistance may best meet those needs. This does not preclude the trustee from assisting their members to meet their individual needs through tailored guidance or advice,” it said.

“Trustees must operate within the existing financial advice framework. Trustees can fulfill the requirements of the covenant and create effective retirement income strategies without providing personal advice.”

The RIC noted the strategy was to express the general actions the trustee would take to assist members to balance key retirement income objectives and that it did not need to consider specific circumstances of individual members.

“Collecting information on beneficiaries in and of itself, would not result in the provision of personal financial advice (which relates to making statements of opinion or recommendations about financial products),” it said.

“The covenant obligations are also consistent with anti-hawking laws, which permits a trustee to contact a member who is approaching retirement with information about different retirement income products offered by the fund, provided that the trustee does not make an offer, or request an invitation to a beneficiary during an unsolicited telephone call, face to face meeting or other real time interaction that creates an expectation of an immediate response.”

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