Highlights

  • CIPRs are combined retirement income products designed to deliver income, Capital access and risk management.
  • They typically combine account-based pensions with lifetime or pooled longevity components.
  • The goal is to provide broadly stable income throughout retirement, including lifetime income support.
  • CIPR-style products aim to balance flexibility with protection against longevity risk.
  • Designs vary significantly between super funds and providers, making comparisons complex.
  • The retirement income covenant influences how funds structure CIPR-style solutions.
  • Some components may reduce capital access in exchange for lifetime income guarantees or pooling benefits.

A comprehensive income product for retirement, often abbreviated as CIPR, is a concept that emerged from Australian Superannuation policy work in the mid-2010s. The original policy idea was for super funds to offer a default retirement income product that combined features such as broadly constant income for life, some access to capital and reasonable management of Investment and longevity risks.

Although the originally proposed CIPR framework was not ultimately enacted in its full form, the underlying ideas have continued to shape Australian retirement income policy. The retirement income covenant, introduced from 1 July 2022, requires APRA-regulated super fund trustees to develop and publish a retirement income strategy for their members, drawing on similar principles.

In practice, the term CIPR is often used informally to refer to combined retirement income solutions offered by super funds and providers that aim to deliver lifetime income, some capital access and risk management in a single package.

How a CIPR works

A CIPR-style product typically combines multiple elements designed to address the three core objectives of broadly constant income for life, some access to capital and reasonable risk management. The exact mix varies between providers but commonly includes:

  • An account-based pension component for flexibility and capital access
  • A lifetime or pooled longevity component for longevity protection
  • Investment strategies that aim to balance growth and stability
  • Optional reversionary or beneficiary features

The combined design seeks to give retirees a single solution that addresses key retirement risks while remaining understandable and practical to use. Some products are structured as a single integrated product; others are described as a 'CIPR-style' bundle of separate components.

Who commonly uses CIPRs or CIPR-style products?

CIPR-style combined retirement income products are commonly considered by:

  • Retirees seeking a simple, packaged retirement income solution
  • Members of super funds that have developed CIPR-style offerings under the retirement income covenant
  • Retirees who value both longevity protection and capital access
  • Individuals who want a structured approach to drawdown
  • Members who prefer not to design their own multi-product retirement income strategy

Even with CIPR-style products, personal advice remains important to ensure the design matches the member's specific circumstances and goals.

Key features

  • Combined retirement income structure with multiple components
  • Aim of broadly constant income for life
  • Some access to capital for unexpected needs
  • Risk management through diversified investments and longevity protection
  • Often built using account-based pensions plus lifetime or pooled longevity products
  • Designed in line with retirement income covenant principles
  • Specific features vary significantly between providers

Potential benefits

CIPR-style products can offer several potential benefits.

Simplicity is a major attraction. A single combined product can address multiple retirement risks without requiring the member to construct a custom multi-product strategy.

Longevity protection through a lifetime or pooled longevity component can address the risk of outliving savings, while the account-based component supports flexibility and capital access.

Risk management through diversified investments and structured drawdown can help support sustainable income over a long retirement.

Alignment with the retirement income covenant can mean these products are designed with member outcomes in mind and supported by Trustee strategy and disclosure obligations.

Key risks and limitations

CIPR-style products also have limitations and risks.

  • Variability in design between providers makes comparison challenging
  • The lifetime or pooled longevity component reduces capital access
  • Investment risk remains for the account-based component
  • Inflation can erode purchasing power without explicit indexation
  • Complex structures may be difficult to understand without advice
  • Past performance is not a reliable indicator of future returns

Tax, superannuation or regulatory considerations

CIPR-style products are typically built using super-funded components that operate in the retirement phase. Earnings on supporting Assets are generally exempt from earnings tax up to the transfer balance cap, and payments to members aged 60 or over are typically tax-free.

Lifetime or pooled longevity components within a CIPR may qualify as innovative income streams, providing favourable Centrelink treatment and specific transfer balance cap valuations.

Trustees of APRA-regulated super funds must publish a retirement income strategy under the covenant, supporting transparency about how the fund helps members achieve broadly constant income, access to capital and risk management.

How it fits into Retirement Planning

CIPR-style products can fit well into retirement planning for members who value an integrated solution. They can simplify decision-making by combining multiple risk-management features in a single package.

Even with a CIPR-style product, retirees benefit from understanding how the components work together, how they interact with the Age Pension and other resources, and how the strategy can be adjusted over time.

Personal advice can help align the chosen product with the member's broader financial position, lifestyle goals and risk preferences.

Common mistakes to avoid

  • Assuming all CIPR-style products are the same
  • Ignoring the impact of lifetime components on capital access
  • Failing to consider how the product interacts with the Age Pension and transfer balance cap
  • Allocating too much capital without considering flexibility
  • Not seeking personal advice on suitability
  • Comparing products only on headline income figures

Questions to ask before using this instrument

  • How is the CIPR structured, and what components does it include?
  • How does it balance income, capital access and risk management?
  • What proportion of capital goes into lifetime or longevity components?
  • How does it interact with the Age Pension and transfer balance cap?
  • What are the fees and ongoing costs?
  • Have I obtained personal advice on suitability?