by mike taylor
A perception has grown among financial advisers that the Government’s prohibition on small superannuation funds offering certain defined benefit pensions has created a bias in favour of life companies.
That is one of the findings contained in an analysis published late last month by Mariner Financial, which claims that the perceived legislative bias seems contrary to the Government’s policy announcement made in February last year advocating more choice in financing retirement incomes.
Mariner claims that the Government could overcome many of the concerns by developing new rules for defined benefit pensions or, more specifically, developing a new method of reasonable benefit limit calculations.
It said that it would be important, however, to make sure that any further policy or legislative change arising did not lead to new product types or to unnecessarily complex change to existing products.
“With the Government’s final report to be tabled this month any announcement on defined benefit pensions in small superannuation funds is expected in this year’s May Budget,” the Mariner report said. “It is important to note that with the industry calling for greater restrictions on small super funds the Government may get even tougher in this year’s Budget.”
The report said that it was possible the Government would move to introduce further investment restrictions or perhaps make compliance difficult, but this would not necessarily see people move back into retail funds.
