Meg's Musings

1 Sep 2021

Meg Heffron

Managing Director

Well things are really heating up in our preparation for the next Super Intensive Day on 14 October. We’re putting the finishing touches on some of our sessions but still just at the planning stages for others.  

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As part of my own preparation I’ve been reading through some of the developments that haven’t really attracted much of my attention to date – including Treasury’s discussion paper on the inclusion of a new covenant in the superannuation law known as the “retirement income covenant”. If legislated as proposed, it would require all superannuation funds to have a retirement income strategy (much like they are currently required to have an investment strategy) from 1 July 2022. The strategy would address how the trustee intends to assist members to balance the three key retirement income objectives: maximizing retirement income, managing the sustainability and stability of that income and access to capital.

This speaks directly to the primary job of superannuation: not saving for the sake of saving but saving in order to secure an income in retirement.

The proposal to include this covenant has been widely criticised as being unnecessary for SMSFs. And there’s some logic to that. After all, of all the funds in the current superannuation system, SMSFs are actually the ones that do end up providing pensions! The most recent annual statistical report by the ATO [Self-managed super funds: A statistical overview 2018-19], for example, flagged that 45% of SMSFs were providing a pension and nearly 70% of all payments from SMSFs in that year were income stream payments. In contrast, only around 40% of the benefit payments from APRA funds were pension payments. This is one situation where the proof really is in the pudding.

But I must admit I always have a concern whenever we argue for different treatment for different superannuation funds. 

While it might be advantageous for SMSFs to be treated differently this time, will we feel the same way about a future difference in treatment? What if a future change saw the investment opportunities for SMSFs being narrowed? Or different contribution rules or conditions of release?

We already have some differences in tax treatment (some SMSFs can’t use the segregated method for exempt pension income and SMSFs can only have one accumulation account while large funds can have several). My preference is for all superannuation funds to be treated pretty much the same most of the time. And so while the retirement covenant may well be a waste of time for most SMSFs, I suggest we just get on with it.

I don’t know whether much of this thinking will make it into my session at the Super Intensive Day – I always find that half of my material ends up on the cutting room floor as there’s only so much we can cover in one day (even one with multiple content streams like ours). But I do know I’ve enjoyed researching it as part of my preparation.

I hope to “see” many of you there on the day. Coincidentally it’s also Heffron’s 23rd birthday and we’re going to celebrate by launching a new online training program – Education Bites.  It’s based on our own experience of dealing with the challenges of working from home, juggling the supervision of school at the same time as working and keeping up to date without the benefit of colleagues nearby. It seems much harder these days to carve out the time to do hours of training on a regular basis.  So we have deliberately developed a stream of very short courses (30-60 minute “bites”) that give on point, highly practical and structured superannuation training (with lots of examples in typical Heffron style). We hope they will be perfect for allowing you and your staff to dip into superannuation learning at a time and place that suits you – maintaining your edge in the most efficient way possible.


 All registered attendees of 2021 Super Intensive Day will receive 3 months free access to our new on-demand  learning program Education Bites valued at $150. Register now.