Government moves on retirement issues

The Federal Government has moved quickly after its October 9 election win to clear the way for the implementation of its retirement incomes policy and has launched a discussion paper covering the key question of people aged over 55 accessing their superannuation while continuing to work.

The Assistant Treasurer, Mal Brough on Wednesday released the Federal Treasury’s consultation document, Transition to Retirement, which broadly canvasses the options confronting retirees, the Government and the superannuation industry.

The discussion paper has narrowed down the discussion to the issue of the most appropriate type of non-commutable income stream and whether limits should be set on the amount of superannuation benefits that can be accessed under the proposed new arrangements.

The paper also asks whether only those people who are working part-time should be allowed access to the new arrangements, in circumstances where some people might choose to make their transition to retirement by reducing their level of responsibility rather than reducing their hours of work.

The Treasury’s discussion paper suggests that an allocated income stream or a variant might be a suitable vehicle for the new arrangements, but says this raises questions about commutation when a recipient retires from the workforce or reaches age 65.

Similarly, it suggests that it may be necessary to apply a cap to the amount of benefits that can be accessed under the policy.

A key question for superannuation funds raised in the document is whether it should be compulsory for superannuation funds to offer transition to retirement arrangements to their members.

It says the particular features of some superannuation schemes, notably defined benefit schemes, might make it difficult to allow a member to both accumulate and draw down on superannuation benefits at the same time.