A way to manage pension freedom – from a land down under.

Design and Distribution Obligations and Product Intervention Powers

A target for UK regulators

FCA and TPR. Please read below a post from an Australian actuary called Jim Hennington.

It describes the regulatory requirements placed on providers of retirement income in Australia.

I have only inserted links, to help readers not familiar with terms such as “DDO”, “SMSF” and “BETA”. Press the links where you want to get a more detailed understanding. 

Over a decade ago, Jim invited me to a meeting of actuaries which sparked my interest in Australian pensions. Now Jim is back in the UK and he continues to delight me with his clear prose, precise thinking and cajoling style which leads me down new corridors.

The Pensions Minister told me that he thinks Britain two years behind Australia, if we can get to the position outlined below by 2025, it will be a regulatory miracle. It will mean us learning and implementing in a way that hasn’t happened since the announcement of the pension freedoms.

Jim , myself and some other like-minded people will be meeting with a DWP policy team this week and I hope we can bring to the table thinking as clear as this.


The Retirement Income Covenant does not require superannuation trustees to offer new products…. However, it and the DDO rules mean trustees must really understand what their retirees need and provide more proactive assistance to ensure the right products are used by the right people (and vice versa – ensure members don’t use inappropriate products).

Trustees that create good solutions (combinations of products and guidance to choose them) – including both members of a couple – should be able to hoover up assets from other funds. This is because some $70 billion or so of super enters the retirement phase each year, including SMSF money.

Just saying ‘we provide retirement income that’s tax free and flexible‘ without focussing on how this annual income goes up and down (and can run out) is unlikely to count as ‘fit for purpose‘ communication. The government’s BETA team on retirement disclosure methods makes good reading.

When trustees decide how much risk their members can be exposed to in retirement, an important consideration is to understand how much downside would cause a materially detrimental effect on the retirees’ standard of living.  The UK regulator calls this concept ‘Capacity for Loss‘.

Are you prepared for the Retirement Income Covenant? – ASFA Superfunds 

“Are you prepared for the Retirement Income Covenant? – ASFA Superfunds 

#superfunds #superannuation #retirementplanning #retirementincome #retirement


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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