SMSF pension ban delayed

By George Liondis

CONTROVERSIAL Government plans to ban self-managed superannuation funds (SMSFs) from providing defined benefit pensions have been delayed while Assistant Treasurer Mal Brough continues to consider industry opposition to the policy.

Brough announced last week the plans had been put on hold until December 31, 2005, allowing people who were members of small super funds on May 11 and who retire before July 1, 2005, to commence a defined benefit pension before the end of the year.

The Government made the shock decision to ban small funds with less than 50 members — including SMSFs — from providing defined benefit pensions in the 2004 Federal Budget.

However, faced with strong opposition to the changes, it initially delayed the move until July 1, 2005, while agreeing to conduct a review of its decision.

A discussion paper released early this year outlined a number of possible outcomes for the review, including to develop new rules under which small funds could continue to offer defined benefit pensions.

Brough said the Government was still considering the outcome of the review, prompting the additional six-month delay.

While giving no indication whether the Government would consider scrapping the ban altogether, Brough said the delay would “give retirees greater certainty about the range of income stream options available to them while the Government considers its response”.