Election fuels SMSF regulation uncertainty

The calling of the October 9 Federal election has thrown the Government’s changes to self-managed superannuation into limbo as Parliament will not sit again before an Australian Labor Party disallowance motion can be put to the Senate.

The Opposition spokesman on Retirement Incomes, Senator Nick Sherry, flagged the ALP’s intention to move for disallowance on August 10, which means that the issue will now be one of the first matters likely to be considered by the new Parliament when it resumes following the election.

The doubtful status of the Government’s regulations will create problems for financial planners and others advising people seeking to establish defined benefit pension arrangements within self managed superannuation funds.

When Senator Sherry announced that the ALP would move to disallow the regulations, he said that if they were allowed to stand, do-it-yourself superannuation funds would either have to close or transfer to a new product - effectively doubling the cost of operation.

“Enormous uncertainty has been created for DIY fund members by this approach,” he says.

The Senate Economics Legislation Committee tabled a report on Monday recommending that the regulations “not be disallowed but that they should apply only temporarily until the Government’s review is finalised and further advice is considered.

“The Committee recommends that, following the consideration, new regulations which allow self managed superannuation funds adequate flexibility to provide a range of pensions, but which also more acutely target any potential abuse replace these regulations,” it says