Government to amend TBC to prevent adverse merger impacts
The government has announced it is taking steps to amend the transfer balance cap (TBC) to prevent members from being adversely impacted by super fund mergers.
This will affect the TBC of individuals who have a capped defined benefit income stream to ensure they are not adversely impacted in the event of a merger or successor fund transfer (SFT).
In its current form, a member’s TBC may be unintentionally impacted due to the original income stream being treated as ceasing and new one beginning.
Minister for financial services, Stephen Jones, said: “This means a new valuation of the capped defined benefit income stream is required which can result in a higher valuation for the transfer balance cap and lead to adverse outcomes for some members.
“The government will ensure that members receiving an income stream prior to a merger or successor fund transfer will continue to receive their income stream without unintentionally impacting the transfer balance cap.”
The amendments will apply retrospectively from 1 July 2017.