Call for grandfathering for annuities holders
People who have already purchased lifetime annuity products should be grandfathered under any Government changes to the Age Pension means test rules, according to a key superannuation industry body.
The Association of Superannuation Funds of Australia (ASFA) has agreed with the adoption of a grandfathering approach to both the means test rules and to other investments affected by any changes.
“ASFA agrees that where retirees have already purchased lifetime products prior to implementation of the new rules, there is a strong case for grandfathering these investments so that the current rules continue to apply,” the organisation has told the Department of Social Security.
“Given that existing purchasers will have already had their Age Pension entitlements set in the past by the existing rules it would be very challenging to develop transitional arrangements to deal with a change in the rules for such persons,” the ASFA submission said.
It said that, as well, such existing product holders generally would not be able to commute the product and there was a reasonable expectation on the part of the holders of such products that the basic structure of the means test rules would continue over the term of the longevity products concerned.
“Allowing existing product holders to choose to opt into the new rules would also open up
opportunities to game the system in order to achieve more favourable outcomes with
inconsistent means test treatment over the life of the product,” the submission said.
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