“The appropriate refocusing of the retirement income debate away from a product perspective means that the long-term pathway to retirement – especially guidance and advice – becomes more important,” the industry body said. 

“It does not make sense to deal with a retirement income covenant in isolation from the structure and provision of financial advice and guidance throughout a member’s working life and into retirement.”

The comments come following recent suggestions that the principles-based approach to retirement income favoured by current Financial Services Minister Jane Hume will not be possible without changing the law regarding personal advice.

The submission noted advice was currently rarely sought by super fund members due to affordability issues, and that the government needed to consider “the full breadth of regulatory and practical issues impacting on the quality and affordability of financial advice, particularly that related to advice for retirement”.

In support of the shift away from mandating certain retirement income products, the AIST said the government should bring forward its Quality of Advice review currently slated for 2022 “to progress in tandem with development of the [retirement income] covenant and be structured so as not to delay the development of retirement income strategies”.

The institute also recommended intra-fund advice be expanded to include “transition to retirement arrangements for the member and their spouse, and optimising entitlements to social security benefits”, as well as making it possible for funds to provide more personalised approaches to tools such as calculators without breaching advice rules.

“The Quality of Advice review should examine the practical issues for the design and provision of cost-effective online tools and calculators to members,” the AIST said. 

“If these are allowed to be provided on a more flexible and real-world basis (e.g. using actual investment options and returns instead of generic options), super funds will be able to design tools that allow members to input their data and generate meaningful and cost-effective guidance to maximise members’ retirement outcomes.”