Govt looks to industry for DB solution
By Craig Phillips
A ban on small superannuation funds offering defined benefit pensions could be overturned, under one of the options being explored by a Federal Government review of the sector.
The Government announced in last year’s Budget that it would restrict small superannuation funds with less than 50 members from providing defined benefit products to members because of fears the pensions were being used for tax avoidance and non-retirement income purposes.
This led to criticism from the small superannuation fund sector that it was being placed at a disadvantage and resulted in the Government commencing a review into the pensions provided by small superannuation funds in August last year.
The results of the review, released last week, propose three options to address the issue, with the Government now calling on further feedback from stakeholders ahead of putting its final recommendation forward before April.
The options are to modify existing pension products or introduce new pension products to satisfy the concerns of small superannuation fund providers, but also to develop new rules under which small funds could offer defined benefit pensions.
The Government said that the options could be implemented separately or in combination, but only to the extent that they are consistent with its retirement income objectives.
Minister for Revenue and Assistant Treasurer Mal Brough said interested parties have until March 11, the one year anniversary of the implementation of the Financial Services Reform Act, to make their submissions.
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