The Coalition announced it would not proceed with Labor's unlegislated measure to to facilitate the provision of DLAs on 14 December 2013.
"[The government said] it would instead consider the proposal as part of the review of the regulatory arrangements for retirement income streams," said a statement by Treasury accompanying the discussion paper.
In a foreword to the discussion paper, Minister for Finance Mathias Cormann said it "appears that the current regulations have restricted the development of DLAs".
"This discussion paper forms the basis for consultation on facilitating these products by extending concessional tax treatment to them," said Mr Cormann.
As it currently stands, DLAs would not be eligible for the earnings tax exemption because they do not pay an income during the deferral period.
The paper also seeks to consult on the minimum payment amounts for account-based pensions.
"The government understands that the turbulence in financial markets over the past five years has placed the capital value of account-based pensions under significant pressure, which the current minimum annual payment requirement has increased," said Mr Cormann.
A spokesperson for annuity provider Challenger welcomed Treasury's release of the discussion paper and its focus on "levelling the playing field to enable the launch of DLAs".
"As noted by the FSI, Australia lags other developed nations when it comes to guaranteed lifetime income stream products," said the spokesperson.
"We expect DLAs to be popular with retirees if the barriers are removed and the rules permit them to be designed properly.
"The questions posed by Treasury are thoughtful and detailed, and we look forward to addressing them and other relevant issues, such as the need to consider behavioural biases in longevity product design," said the spokesperson.
