The Minister for Revenue and Assistant Treasurer, Peter Dutton, today released for public comment draft regulations on pension and annuities for the Government’s Simplified Superannuation reforms.
The draft regulations amend the Superannuation Industry (Supervision) Regulations 1994 to provide new simplified standards for annuities and pensions and make other changes to the payment rules for superannuation benefits. These changes include removing the requirement for compulsory cashing of superannuation benefits for people over the age of 65 from 1 July 2007, and revised rules for the payment of superannuation death benefits.
The new minimum standards for pensions are an important element of the Government’s broader package of reforms to simplify superannuation. For income streams commencing on or after 20 September 2007, a single set of minimum standards will replace the current multiple sets of rules. All pensions that meet the new minimum standards will be taxed the same on payment, and earnings on assets supporting these pensions will be tax exempt.
Compared to the existing rules, the new minimum standards will give retirees greater flexibility over how much income they draw from their pension each year. A minimum payment will be required each year to ensure that the capital in the pension is generally drawn down over time. However, retirees will be free to take as much income as they wish above the minimum. Under the new rules retirees will also retain the ability to choose between account-based and more traditional income stream products.
The Government invites interested parties to provide comments on the draft regulations by Thursday, 1 February 2007. The draft regulations are available from the website, http://simplersuper.treasury.gov.au.
Comments can be sent to the following address:
General Manager
Superannuation, Retirement and Savings Division
The Treasury
Langton Crescent
PARKES ACT 2600
Email:
simplersuper@treasury.gov.au