Australia's Department of the Treasury consults on voluntary best practice principles for superannuation retirement income solutions

Australia's Department of the Treasury published a consultation paper proposing draft voluntary best practice principles to guide trustees of registrable superannuation entities in designing and delivering retirement income solutions under the Retirement Income Covenant. The guidance is intended to complement existing legal and prudential obligations and would not create additional compliance action beyond existing requirements, although trustees are expected to be able to explain to members why a principle has not been adopted. The draft principles focus on (i) deeper use of data and research to understand members at or approaching retirement, including building at least three member cohorts, (ii) ensuring access to key retirement-phase building blocks including a lifetime income product (other than the Age Pension), an account-based pension and lump sums, and (iii) designing product settings and trustee-designed solutions that better balance income maximisation, risk management and flexibility, including trustee-designed drawdown pathways that are higher than the legislated minimum drawdown rate for most solutions. They also set expectations for member engagement, such as providing income projections in annual and pay-cycle terms, communicating cohort-relevant information and trustee-designed solutions to members approaching retirement, including members who receive personal financial advice, and notifying members who have drawn the minimum drawdown amount for three consecutive years about the option to draw at a higher rate. Submissions are requested by 18 September 2025, and the paper notes the principles have not received Government approval.