Simplified super regulations a missed opportunity
The head of technical services at a leading financial services organisation believes the changes to minimum standards for pensions implemented by the Government last week did not go far enough to achieve the type of simpler superannuation framework promised.
Macquarie Adviser Services’ David Shirlow said: “It really was a golden opportunity to put something in place for the income stream rules, the pension rules, which would stand the test of time. Unfortunately, what has been put in place I don’t think will stand the test of time.”
Shirlow’s concerns centre mainly on the new rules that apply to both account-based and traditional guaranteed income stream products.
“The Government originally announced something that appeared as if it would be quite visionary in that, aside from lifetime pensions, there was to be only one type of pension to apply, which was the new account-based pension. In other words, there was to be one set of standards and they were to be flexible,” Shirlow explained.
He said he was disappointed that the regulations introduced a number of different income streams along with the new account-based products.
“They also introduced a raft of income streams, the rules for which are designed around classic traditional life office annuity products and while it’s a great thing that those types of income streams have been accommodated, it’s just a disappointment that the Government didn’t come forward with one set of standards to cover all different types of income streams,” Shirlow said.
He also expressed his disappointment that the new regulations did not allow individuals to make new contributions to existing pension accounts.
“It would actually make a lot of sense to allow new contributions to existing accounts for tax purposes because we’ve done away with RBLs (reasonable benefit limits), so there’s no need to keep separate accounts for those purposes, and in fact the Government has really indicated that it wants to be able to aggregate people’s benefits for the purposes of calculating their tax components. So that suggests the smart thing to do would be to aggregate all of your pension money into one account,” Shirlow said.
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