PwC Private Clients director Liz Westover said there are still a number of people who hold market linked and complying lifetime income streams in their SMSF.
“These types of income streams may no longer be appropriate for them but they have an inability to shut them down without significant consequences,” explained Ms Westover.
“In some cases, they have no option but to keep them operating due [to] their non-commutable status which can further lock them into continuing an SMSF.”
The superannuation reforms have compounded the complexity and rigidity of these arrangements, she said, and this is resulting in poor outcomes for clients.
“Industry is working with the Australian Tax Office and the government to find an appropriate outcome for these people,” she said.
Sure, they were started for tax compression under a former regime. But, surely a ‘tax consequence’ could be embedded to release these funds from the legacy arrangements as the regime has changed (twice) since then?
As for Centrelink assessment of grandfathered ABP, aren’t these “locked’ due to a preferential treatment by maintaining former?
No-one could ever second guess the political machinations that emanate from Canberra and, up until Costello’s “Simple Super”, the system was pretty stable. It was only when he threw the deck into the air that the system has become a mess.
And look what else Howard/Costello was responsible for that is now playing out – the refund of franking credits. Apparently, nolonger viable but, suited a politic purpose in better Budgetary times.
No mention of those 1,000’s of Centrelink-reliant clients who have been locked into account-based pensions and can never change providers (including industry, public offer and SMSF’s) without their “new” pension being subject to deeming and impacting on their pension entitlement??? Surely this would seem like a more worthy case to be pushing…
What I don’t understand is why advisors are committing SMSF members to the “complexity and rigidity” of these types of non-commutable pensions without accepting the risks that things can change. Suck it up. You started these pensions to get around RBL and didn’t think about the consequences.