Broadly, the Review of Retirement Income Stream Regulation discussion paper is seeking feedback on the regulatory barriers restricting the availability of “relevant and appropriate” income stream products in Australia, Minister for Finance and Acting Assistant Treasurer Mathias Cormann stated.
“The Government understands that the turbulence in financial markets over the past five years has placed the capital value of account-based pensions under significant pressure, which the current minimum annual payment requirement has increased,” Senator Cormann said.
“We are committed to providing self-funded retirees with confidence that their funds will not run out because of inappropriate forced withdrawals from their pension products.”
In the report, the government is questioning whether minimum drawdown amounts should also increase in response to “very strong market performance.”
The government is also seeking feedback on whether there should be an automatic mechanism for adjusting the minimum drawdown amounts in response to “significant adverse investment market performance.”
“If the minimum payment amount should fluctuate in response to market conditions, it would be possible for the government of the day to alter the amounts (as occurred during the GFC) as appropriate, or for the calculation of the minimum payment amount to automatically reflect changing market conditions,” the report stated.
“If the latter, it would be necessary for the minimum drawdown amount to be a function of at least one new exogenous variable that captured or acted as a proxy for market conditions.”