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Wednesday 5 June 2019

19-129MR ASIC amends relief conditions for superannuation and retirement calculators

ASIC has amended ASIC Corporations (Generic Calculators) Instrument 2016/207 to ensure that estimates produced by superannuation and retirement calculators are adjusted for inflation.

The new requirements will commence on 5 December 2019 to provide calculator providers with a transition period of six months.

The amendments require superannuation and retirement calculator providers to adjust for inflation in estimates by using either:

  • the default inflation rate set out in the instrument for      superannuation and retirement calculators; or
  • an alternative inflation rate, as long as certain disclosure      requirements are met.

The default inflation rate set out in the instrument is the rate used by ASIC’s MoneySmart superannuation and retirement calculators. It includes a component that reflects changes in the cost of meeting increases in community living standards. Adjusting for the cost of meeting increases in community living standards may assist users to better decide if future retirement assets or income will be adequate compared to their standard of living. ASIC will amend the instrument in June each year to reflect any changes in the default inflation rate used by ASIC’s MoneySmart superannuation and retirement calculators. This rate is reviewed and updated annually.

The option of using an alternative inflation rate recognises that there may be instances where it is appropriate for a superannuation and retirement calculator to use a different inflation assumption—for example, to take into account:

  • the wage profile of the likely users of the calculator; or
  • the provider’s wage growth outlook.

If the alternative inflation rate used does not include a component that reflects the cost of meeting increases in community living standards, the superannuation or retirement calculator must explain the implications of not taking into account the cost of meeting those increases. 

Superannuation and retirement calculators can be a useful and cost-effective educational tool through which users can better understand their financial circumstances and goals. The amendments to the instrument will promote the comparability of superannuation and retirement estimates whilst providing flexibility for providers to use a different inflation rate assumption where it is reasonable to do so.

Until commencement of the changes on 5 December 2019, superannuation and retirement calculators must disclose whether or not estimates take into account changes in the cost of living.

ASIC has also updated its existing guidance in Regulatory Guide 167 Licensing: Discretionary Powers (RG 167) to reflect the amendments to the legislative instrument.

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Background

A generic financial calculator is a facility, device or table that:

  • is used to make a general numerical calculation about a financial product; and
  • does not advertise or promote one or more specific financial products.
Last updated: 05/06/2019 12:00