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Industry endorses pension move
The superannuation funds industry has broadly welcomed the Federal Government's decision to suspend the requirement to pay out minimum payments from account-based pensions in the second half of this year.
The move was announced by the Treasurer, Wayne Swan, and the Minister for Superannuation and Corporate Law, Senator Nick Sherry, to help retirees avoid crystallising their losses in the current market downturn.
The initiative was welcomed by the Investment and Financial Services Association, the Financial Planning Association (FPA) and the Australian Institute of Superannuation Trustees, with chief executive Fiona Reynolds saying the new measures would help fully self-funded retirees - as well as those receiving a part age pension in addition to their superannuation pension - avoid having to sell superannuation assets and realise losses in a depressed market.
She said the move recognised that the retirement savings of many Australians would decline faster than expected as result of the market meltdown and that, those in a position to do so, would benefit from reducing their drawdown amounts to allow time for their balances to recover.
FPA chief executive Jo-Anne Bloch said the move was consistent with recommendations contained in the Government's pre-Budget submission.
"Pensioners can now choose to reduce their pension payments by 50 per cent rather than be required to take a minimum amount which may not suit their current needs," she said. "For many people, the minimum payout may have required the sale of assets, or their capital, at significantly reduced prices."
However, the Opposition Spokesman on Financial Services, Chris Pearce, while welcoming the initiative, claimed that the Government ought to move similarly to assist those whose investments were affected by the Government's bank guarantee, such as mortgage funds.
AUTHOR
Mike Taylor
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