Govt close to moving on draw-down rules
The Federal Government has signalled it is close to announcing changes to the draw-down rules on account based pensions to provide a more flexible environment.
The Assistant Treasurer, Josh Frydenberg, has told a Canberra conference that the Government is aiming to deliver changes which make the draw-down rules more flexible without undermining their integrity.
"I am hopeful of making an announcement on this in the not too distant future," he said.
"To be clear, we are not considering increasing the current rates, but rather making sure the system allows for innovative retirement products to be developed. We have also been looking more broadly at the range of post retirement products currently available."
Frydenberg said the Treasury consultation process had looked at whether it would be possible to allow for products that do not pay an immediate or regular pension and cited as an example that, rather than complying with a minimum withdrawal rule, products could instead be allowed to comply with a capital depletion rule.
"Such an approach should achieve the same outcome of protecting against estate planning but could better cater for longevity risk products that have more flexible payment structures — including deferral periods," the minister said. "This is an interesting idea and one that I understand the industry has responded positively to."
"We have also been consulting on ways to make it easier for people to purchase longevity insurance incrementally, which could be more attractive to some retirees compared to parting with a lump payment."
"While it would be premature of me to announce the outcome of this review today, I am hopeful that we will be able to deliver a package of changes that facilitates the emergence of new and innovative retirement income stream products," Frydenberg said.
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