Retirement & Ageing Advisory Panel: Covenant presents Funds with a competitive opportunity in member acquisition and retention challenge

15 September 2021 

Sydney, Australia (September 15, 2021) – The Allianz Retire+ Retirement & Ageing Advisory Panel said executing Treasury's Retirement Income Covenant presents a competitive advantage for Trustees looking to address member acquisition and retention challenges, following the introduction of ‘stapling’ as part of the Your Future, Your Super reform.

The Advisory Panel comprises experts from the Super, Aged Care and Retirement industry and is Chaired by Allianz Retire+, Head of Institutional Solutions, Fintan Thornton; and includes recent appointee and leading Superannuation expert, David Coogan; panel member of the Retirement Income Review, Dr Deborah Ralston; Non-Executive Director, Nicolette Rubinsztein; and financial services and aged-care specialist and Allianz Retire+ Director, Sally Evans. The group meet periodically to discuss issues relating to the delivery of superior retirement outcomes.

In a recent convening, the Panel stated that the impending legislation for Trustees' to deliver retirement income strategies by 1 July 2022 has become an important catalyst to reconsider the retirement roadmap for what represents such a valuable member segment for Trustees. 

"The success of our super system is retirement income, so it's pleasing to see such a heavy focus on retirement, said Evans. “Those moving 'first and fast' are finding a competitive advantage in creating the marketplace".  

Coogan commented:  “A big gap in the market is the development of income stream options that complement the account-based pension and mitigate longevity risk.  Members will be looking to supplement their allocated pension, while guaranteeing they can address their risk of running out of money.”

However, the group cited the danger of falling short for those not yet focused on their retirement income obligations. 

Thornton said: "The implications of Stapling presents an additional incentive. One of the most significant sources of loss of members is pre-retirement, so getting out of the gate with a competitive retirement offer will form a part of the retention solution. However, a central component needs to be sustainability, and access to scale is a critical factor in many of these solutions."  

In defining what a successful Covenant implementation may look like, the Panel agreed that the labelling and subsequent comparison of innovative product structures presents a significant obligation for the industry. Careful consideration is required regarding consumer protection and what warrants the term "income for life" or constitutes a guarantee or what is a risk borne by individual or pool of members. 

Thornton commented "Framing and language will be important in describing what customers are going to be delivered, and which structures can technically ‘guarantee’ outcomes or “income for life” for their members.

“There’s a quantifiable difference in an account-based pension, where the member bears all the risk or in pooling structures sharing the risk amongst a cohort of members; versus a guarantee from a life company. Members will need guidance in understanding the trade-offs and associated risks a structure may present in not meeting its stated outcome" said Thornton.

Evans stated: "Building member-centric retirement strategies means we must not overlook the value that people place on a guaranteed outcome in retirement. People want the certainty and security that a guarantee offers. They are prepared to pay for it." 

Thornton anticipated that the industry would seek further guidance from Treasury regarding Trustees aiding members to determine the suitability of retirement income strategies. 

 “Trustees will understandably be seeking some protection in the provision of what constitutes information, guided choice, through to advice, likely via a safe harbour, to help them confidently guide members to assess suitability.

But we should not see the provision of advice in this context as a roadblock to a successful Covenant” Thornton added.



Media contact:
Michaela Wray, Allianz Retire+
P: 0466 455 430 E:


Notes for editors:

About Allianz Retire+

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