The Government should convene an urgent industry roundtable to deal with the significant problems around transition-to-retirement income streams (TRIS), according to the Association of Superannuation Funds of Australia (ASFA).
ASFA has urged the roundtable as a means of workshopping potential solutions to significant timing and transitional issues around the changes flowing from the May Budget.
ASFA has warned the Government that superannuation funds will need at least 12 months lead time to put in place changes to the TRIS and new transfer balance cap.
It said the measures posed a considerable challenge if they were to be implemented by the proposed 1 July, 2017 commencement date.
The superannuation industry needs, as a minimum, a 12-month lead time from the time that legislative requirements have been finalised to settle the administrative design, determine the information technology specifications, and build and test system changes,” the submission said.
It said a shorter period “introduces significant risk and imposes additional, unnecessary cost”.
“There are a number of extensive and complex regulatory reforms scheduled for commencement over the coming 12 months, including changes to SuperStream and fee and cost disclosure,” the submission said.
“Accordingly, project resourcing capacity is extremely limited and there are finite windows for system releases.”
It said funds had indicated there was little likelihood of their being able to meet the commencement date of 1 July 2017 with respect to the changes to TRIS and the transfer balance cap as currently drafted.
“With respect to the changes to TRIS, a number of funds have indicated that it will take them up to 18 to 24 months to build the new tax engine that will be required to implement this measure. The alternative — to close their existing products — would take at least nine months to complete.”
