Class order 14/870 allows superannuation trustees to include an estimate of the member’s entitlement to the aged pension in superannuation forecasts.
However, ASIC has ruled the estimate must be calculated based on a number of set assumptions, including that the member has a partner, that the couple jointly owns their home, that the couple has the same amount of superannuation and that the couple has no other assets or income affecting the pension.
In addition, aged pension estimates must be accompanied by a disclaimer prescribed by ASIC.
The updated version of Regulatory Guide 229: Superannuation forecasts also provides guidance as to the type of information super funds must include in superannuation forecasts to qualify for the exemption.
According to the guide, forecasts must provide members with certain mandatory content, use set calculations and assumptions, and follow a prescribed methodology.
Moreover, under the guide, super funds are not allowed to provide misleading information.
The report said retirement estimates would be presumed to be more likely to be misleading in certain situations, including estimates for a member of an eligible rollover fund or a defined benefit fund, with a small account balance, in a de-accumulation phase or for those over the age of 67.
However, ASIC confirmed it would not act against super funds that provided estimates in accordance with its regulations.
“Regardless of the type of super fund, a trustee must not provide a member with a retirement estimate if doing so would be misleading, or be likely to mislead,” the report said.
“However, we will not take action if a trustee follows the prescribed assumptions and methodology set out in this guide.”
Australian Institute of Superannuation Trustees chief executive Tom Garcia welcomed the news.
“Including the age pension in retirement forecasts will provide members with a much more realistic picture of their future retirement income,” Mr Garcia said.
“This is a key step in communicating superannuation as an income stream and getting the focus away from lump sum balances,” he said.
The class order will “improve the understanding of the retirement income system”, Mr Garcia added.
“Not everyone realises how the age pension works in tandem with superannuation and some people, especially those with small balances, can be experiencing unnecessary worry about their future level of retirement income,” he said.
