Government urged to prioritise legacy pension amnesty
The government should first implement its legacy pension amnesty measure before enacting the draft amendments relating to capped defined benefit streams and excess transfer balance amounts, said the Financial Services Council.
In December last year, the government released draft amendments that are aimed at addressing problems with commutations of excess transfer balance amounts from certain income stream products.
In a submission to Treasury’s consultation on the amendments, the Financial Services Council (FSC) said that while the government’s announcement from the budget about an amnesty period for legacy pensions is not the same as the draft amendments released in December, there is an overlap between the two measures.
The government in the budget last year announced a measure to allow individuals to exit a specified range of legacy retirement products, together with any associated reserves for a two-year period.
The FSC said the government should therefore consider first implementing the two-year exit measure for legacy pensions before enacting these latest changes.
“[Otherwise] there might be unnecessary legislative implementation and burden for industry of fixing a gap regarding commutation exceptions, and then introducing legislation to allow people to fully exit these products,” it said.
“By first allowing individuals the opportunity to move out of these legacy style pensions and assessing the take up of ability to exit, there can then be consideration for whether there is a need to implement these draft amendments for the remainder in this manner.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
