“Australia has $2.61 trillion in managed super funds and this underlines the significant role that the fund trustee plays,” Mr Conway said.

“Considering the interim findings of the Hayne royal commission, the Productivity Commission superannuation report and other inquiries, the role and accountability of trustees must be reinforced.”

Australia needs a framework, he said, which acknowledges significant funds being invested, varying levels of expertise and knowledge of trustees, along with their reliance on external experts, to provide further guidance in the covenant to clarify the obligations of trustees.

“The IPA strongly supports the high-level guidance of a comprehensive income product for retirement (CIPR) to ensure fund members have efficient and constant income, longevity risk management and some access to capital,” Mr Conway said.

“However, CIPRs are not appropriate for all. For example, where illness leads to shorter life expectancy or a lower super balance.”

Mr Conway said that the IPA supports retirement income covenant principles that encompass the development and existence of a retirement income strategy and facilitating engagement of fund members with decision making on their own retirement.

“Higher levels of financial literacy would also lead to higher levels of fund member engagement as recommended by the Productivity Commission, a recommendation we strongly support,” he said.

While the bulk of the proposals released in Treasury’s Retirement Income Covenant Position Paper in May last year applied solely to APRA-regulated super funds, one of the covenants which requires trustees to develop a retirement income strategy for members, and regularly review it, will also apply to SMSFs.

The covenant requires trustees to consider factors such as maximising income for life for members; the potential life spans of members; and the costs and benefits of managing longevity risk for members as a whole, and managing risks that affect the stability of income, including inflation.

It also asks trustees to consider how members will be provided access to capital and the expected member eligibility for the age pension.