Government to proceed with legacy pension changes
The government has confirmed it will be moving ahead with the two-year amnesty for legacy pensions, according to the SMSF Association.
In the May 2021 budget, the previous Coalition government announced a measure which would allow individuals to exit a range of legacy retirement products, together with any associated reserves for a two-year period.
The allocations and the commuted reserves would be taxed as an assessable contribution under the measure.
However, the two-year amnesty measure has remained in limbo following the change in government.
While the Labor government provided clarity on whether it would proceed with a range of measures proposed by the previous government, it was silent about the legacy pension measure.
Speaking at the SMSF Association National Conference, SMSF Association chief executive Peter Burgess said the association recently sought clarification from the Minister’s office on whether the government would proceed with this change.
“We have been told that they do intend to proceed with the changes to legacy pensions which is good news,” said Mr Burgess.
“So, we think they are going to proceed with these particular changes, it is not a policy reversal.”
Mr Burgess said the association is hoping to see something on the measure by the end of the calendar year.
“We may see a consultation paper released [on the measure] towards the end of the year.”
In a recent article, Accurium principal and senior actuary Melanie Dunn said the two-year amnesty is an important measure for those with legacy pensions given the complexity of these pensions.
“These pensions are not easily maintained within the current retirement framework primarily designed for account-based type income streams with complex rules for how the pensions are treated under the transfer balance cap, and how to access the remaining capital on death whilst minimising potentially significant tax implications,” said Ms Dunn.
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.