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ASFA warns on legislation
The Federal Government has been urged not to proceed with legislation which may have the effect of making account-based income streams less attractive to Australian retirees.
The call is contained in a pre-Budget submission by the Association of Superannuation Funds of Australia (ASFA), which at the same time as calling for changes to allow a seamless transition to retirement income streams warned that the legislation would serve to include account-based income streams in the financial assets subject to deeming arrangements.
It warned that the measure “has the potential to substantially impact on the decisions retirees make about taking superannuation income streams”.
“While existing age and disability pensioners holding an account-based income stream are proposed to be exempted from the deeming arrangements in regard to any account-based income stream held prior to 1 January 2015, there are potentially thousands of other retirees who will be affected by the change,” the pre-Budget submission said.
It said that around 250,000 people turned 65 each year and just over 40 per cent of these would be on a part Age Pension and subject to the asset and income test.
“ASFA Research Centre preliminary estimates indicate this will mean around 20,000 new Age Pensioners a year will be worse off as a result of the change, as they have superannuation assets in the range of the proposed measure ($240,000 to $310,00 for a couple or between $140,000 to $240,000 for a single person),” it said.
The submission said ASFA estimated future age pensioner couples who were affected by the change would receive up to $1000 less a year than they would under the current means test arrangements, with the exact amount depending on their account balance, the amount they are drawing down each year and the deductible amount.
“As a result, the measure, if adopted, would make account-based income streams less attractive than they previously were,” it said.
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