Just days after announcing a strong result buoyed by the take-up of annuities, Challenger has sought to place deferred lifetime annuities (DLAs) on the agenda for the forthcoming Superannuation Roundtable.
The company has today issued a background paper on DLAs pointing out that their adoption will require legislative change and clarification around their tax treatment.
The background paper argues that each year more than $50 billion moves from the accumulation phase into drawdown phase and that new retirement products are needed not just because of a looming increase in structural demand "but also because the retirement product most often sold to retirees, the account-based pension … has failed to protect most retirees’ income and capital during the last four years of market volatility".
The Challenger background paper points out that both the Institute of Actuaries and the Financial Services Council made pre-Budget submissions supporting the removal of impediments to DLAs such as the Superannuation Industry (Supervision) Act definition of a superannuation pension, and the earnings tax treatment of non-commutable deferred lifetime annuities.
The Challenger push on DLAs came at the same time as the Financial Planning Association (FPA) pointed out that it would be the only voice representing the financial planning profession at tomorrow’s first sitting of the roundtable.
With the roundtable expected to kick-off with discussion around proposed changes to the concessional contributions caps, FPA chief executive, Mark Rantall said his organisation would be recommending that superannuation guarantee contributions are removed from the concessional contributions caps and that the caps continue indefinitely at $50,000 for those aged over 50, with a provision for indexation on both $25,000 and $50,000 caps.
