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Australia based investment managing firm Challenger Limited (ASX:CGF) provided an update on governmentâs Retirement Income Framework that was announced yesterday.
In the release dated 31 October 2018, the Government reaffirmed its support to the development of more efficient retirement income products. For this purpose, the government has designed a new retirement income contract under which the superannuation trustees will be required to offer members Comprehensive Income Products for Retirement from 1 July 2020. The governmentâs announcement in respect of retirement income strategy was first announced in the Federal Budget on 8 May 2018.
Assistant Treasurer Stuart Robert MP addressed the governmentâs decision to increase the threshold superannuation balance requiring the offer of a Comprehensive Income Products for Retirement. That translates an increase of $50,000 to $100,000, reflecting the response to industry feedback.Â
The idea to progress the Retirement Income Framework is underpinned by the vision to improve the standard of living of retirees by developing the retirement phase of superannuation. Moreover, the regulators stated that these new regulations would have no effect on the legislation and regulations already in place.
Encouraging the announcement from Assistant Treasurer Robert, Challenger Chief Executive Officer Brian Benari stated that the Framework would make it easier for retirees to access secure and stable income in retirement.
On Government intention to stay committed to the development of a broader retirement income products including deferred lifetime annuities, Mr. Benari added these reforms will help ensure that the pooled lifetime income products are viable option for more Australian retirees.
With the view of providing sufficient time for the implementation of high-quality retirement products, the government has allowed this enhanced framework to come into force by 1 July 2020. Whereas, new means test rules to support these new products are scheduled to come into effect on 1 July 2019.
The outgoing CEO Mr. Benari stated that while many product providers are well prepared for the reforms and are already developing improved offerings for members in retirement, allowing additional time and increasing the threshold will ensure the whole industry has the time and scope to develop the right products to meet the needs of their members.
Yes, âoutgoingâ because in the release dated 26 October 2018 Challenger group announced about Brian Benariâs decision to retire from the role of Managing Director and Chief Executive Officer of Challenger Limited. Subsequently, Challengerâs Richard Howes has been appointed to step up as a new CEO of the company from the date of Mr. Benariâs retirement, due in January 2019. Further, it has been clearly stated that after stepping down from Challengerâs Board, Mr. Benari will continue to work with successor Mr. Howes over a six-month period to ensure smooth transition.
With this update, Challengerâs shares rebounded in todayâs trade. After wrapping up yesterdayâs session at lower levels, CGF share price today jumped 3.899% to close at $10.660 as on 1 November 2018. The stock last traded at a PE of 19.00 x with market capitalization of $6.27 billion. Moreover, in the past one year the stock has fallen by 22.86%.
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