The Retirement Income Covenant came into effect on 1 July 2022. It requires all APRA-regulated superannuation trustees (industry funds, retail funds, and corporate funds) to formulate, review, and give effect to a Retirement Income Strategy for their members at or approaching retirement. The covenant is set out in the Superannuation Industry (Supervision) Act 1993 and was a key reform recommendation from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
What Is the Retirement Income Covenant?
Before the covenant, most super funds focused on the accumulation phase — helping members grow their super during working life. The retirement phase (the “decumulation” of accumulated savings) was often left to members to navigate on their own, with little tailored support from their fund.
The Retirement Income Covenant changes this. It places a legislative obligation on trustees to actively assist members in making the most of their super in retirement — not just hold and grow it.
What the Covenant Requires of Trustees
The covenant requires trustees to formulate a Retirement Income Strategy that seeks to optimise outcomes across three objectives:
1. Maximising expected retirement income The strategy must aim to maximise the income members can draw from their retirement savings over their lifetime. This means the fund must consider how its product design, investment options, and member support tools help members generate sustainable income.
2. Managing relevant risks The strategy must identify and manage risks that members face in retirement, including:
- Longevity risk: The risk of outliving savings
- Investment risk: The risk of poor returns reducing retirement income
- Sequencing risk: The risk of a market downturn early in retirement having an outsized impact
- Inflation risk: The eroding effect of inflation on fixed income
3. Providing flexible access to capital Members should retain access to their savings if they need a lump sum for major expenses (health, aged care, home modifications). The strategy must not lock members into a rigid income structure that prevents access to capital.
What Trustees Must Do in Practice
The covenant does not prescribe exactly what products or services funds must offer — it is outcomes-focused. However, in practice, APRA expects funds to:
- Offer retirement income products appropriate for members at or near retirement (e.g. account-based pensions, lifecycle products, potential annuity access)
- Identify and segment retirement-phase members — understanding who is approaching or in retirement and what they need
- Provide targeted support and guidance to members near retirement — more than generic information; funds should proactively reach out
- Consider insurance needs for members in the retirement transition
- Review the strategy annually and measure outcomes
How to Check Your Fund’s Retirement Income Strategy
The Retirement Income Strategy is a public document — APRA-regulated funds are required to make it available to members. To find your fund’s strategy:
- Go to your fund’s website
- Look for sections on “Retirement”, “Retirement Income Strategy”, or “Member Disclosure Documents”
- The document should describe how the fund supports members approaching or in retirement
If you can’t find it, contact your fund directly and request a copy — they are legally required to provide it.
What to look for in the strategy:
- How the fund defines its retirement member cohort
- What products or income options the fund offers (account-based pension, lifetime annuity access)
- What tools and advice services are available (e.g. financial advice, online calculators, phone guidance)
- How the fund identifies and manages longevity and sequencing risk
Limitations of the Covenant
The Retirement Income Covenant is an obligation on trustees — not a guarantee of any specific outcome for individual members. Key limitations:
Not personal financial advice: The strategy is a fund-level policy. It does not constitute individual advice tailored to your personal circumstances. Funds may provide access to financial advisers, but the covenant itself does not require personalised advice to every member.
Not a guarantee of income: The covenant does not guarantee any particular level of retirement income. Outcomes depend on member balances, investment performance, and individual decisions.
SMSFs are excluded: The Retirement Income Covenant applies to APRA-regulated funds only. SMSF trustees have their own obligations under the investment strategy framework, but the Retirement Income Covenant does not apply.
APRA’s Oversight
APRA monitors funds’ compliance with the Retirement Income Covenant through:
- Annual data collection from trustees
- Publication of industry-wide insights and guidance
- Direct engagement with funds whose retirement income strategies are assessed as inadequate
- Supervisory action against funds that persistently fail to meet the covenant
APRA published its first Retirement Income Covenant insights report in 2023, identifying areas where the industry needed to improve — particularly around proactive member engagement and the availability of comprehensive retirement income products.
Frequently Asked Questions
What happens if my fund doesn’t have a Retirement Income Strategy? All APRA-regulated funds were required to have a strategy from 1 July 2022. If a fund does not have one, or has one that is inadequate, APRA can take supervisory action including enforceable undertakings and penalties. Members can also complain to APRA if they believe their fund is not meeting its covenant obligations.
Does this mean my fund has to provide me with a pension product? Not necessarily — the covenant is flexible and funds can meet it in different ways. Some funds offer comprehensive retirement income products (account-based pensions, access to annuities), while others primarily provide guidance and education. The expectation from APRA is that funds actively support members, not that they all offer identical products.
I’ve never heard my fund mention a Retirement Income Strategy — what should I do? Check your fund’s website for the strategy document. If you are approaching retirement (say, within 10 years), it’s also worth contacting your fund to understand what retirement products and support services they offer. You can also compare funds on their retirement-phase offerings when considering whether to stay with your current fund.
See also: Retirement Income. For further guidance, see APRA’s Retirement Income Covenant information or the relevant legislative provisions in the SIS Act at legislation.gov.au. For advice tailored to your situation, speak with a licensed financial adviser through MoneySmart.