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.”
