Minister for Revenue and Assistant Treasurer, Mal Brough, today released the regulations for the Government's Transition to retirement measure.
From 1 July 2005, these regulations will allow a person who has reached their preservation age to access their superannuation through an income stream without having to retire permanently from the workforce.
"It is anticipated that this innovation will complement other Howard Government initiatives to help older Australians who want to stay connected to the workforce by removing an artificial barrier," Mr Brough said today.
These regulations complete the process of implementing the policy initiatives announced by the Treasurer on 25 February 2004 in A more flexible and adaptable retirement income system.
"This initiative will provide more options for people making the transition from work to retirement. For example, a person could continue working part-time and use part of their superannuation to supplement their income," Mr Brough said today.
In designing these regulations, the Government has been careful to provide maximum flexibility for individuals while minimising complexity. That includes:
- Not imposing a work test
- Not capping the amount of benefits a person can access
- Allowing individuals to use existing pension products (for example allocated pensions or market linked pensions), rather than creating a new pension product
- Allowing people who purchase an allocated pension to stop (or commute) their income stream and return the benefits to their super fund. This would benefit people who choose to return to full time work.
Under the policy, allocated pensions can't be commuted and cashed out as a lump sum while a person is still working. However, once a person retires or reaches age 65, they will have the option to commute the allocated pension and access their full benefits.
The features of the policy outlined above were strongly supported in submissions to the Government's consultation process in late 2004. The regulations (the Retirement Savings Accounts Amendment Regulations 2005 (No.1) and the Superannuation Industry (Supervision) Amendment Regulations 2005 (No.2)) are available on the Federal Register of Legislative Instruments website at www.frli.gov.au.