The Federal Government has released draft superannuation income stream regulations for public consultation in a bid to implement super taxation reforms and introduce a new set of design rules for lifetime super income stream products.
Minister for Revenue and Financial Services, Kelly O’Dwyer said the reforms would allow retirees to better manage consumption and longevity risk in retirement.
Super funds and life insurance companies would receive a tax exemption on income from assets supporting these new income stream products, on condition they were currently payable or, in the case of deferred products, held for an individual that had reached retirement.
“These new rules will remove taxation barriers to the development of new products that will provide greater flexibility in the design of income stream products to give more choice to consumers, while ensuring income is provided throughout retirement,” O’Dwyer said.
The new standards would cover various lifetime products that did not currently meet the existing annuity and pension standards in sub-regulations of Superannuation Industry (Supervision) Regulations 1994 (SISR 1994).
“Under the new standards the income streams would be required to be payable for a beneficiary’s remaining lifetime, and income stream payments could be guaranteed in whole or part by the income stream provider, or determined in whole or part through returns on a collective pool of assets or the mortality experience of the beneficiaries of the asset pool,” the exposure draft explanatory statement said.
“These new income streams may also have a deferral period for annual payments and would be permitted to be commuted subject to a declining capital access schedule and preservation rules.”
O’Dwyer said these new products would precede the development of comprehensive income stream products for retirement (CIPRs).
“I encourage all interested stakeholders to provide their views so that we can give effect to these important reforms as effectively as possible,” she said.
Submissions were due by 12 April.
