The Federal Government has backed down on a decision to remove an asset test exemption for people who are forced to take out new income streams.
In response to a letter from the Investment and Financial Services Association’s (IFSA) chief executive Richard Gilbert, the Government has agreed to widen a number of exemptions that were due to take effect from September 20.
The new provisions include scenarios such as when a self managed super fund (SMSF) member’s spouse or other member dies and the surviving member wants to close the fund and needs to rollover into a new asset test exemption (ATE) income stream.
The 50 per cent assets test exemption will be removed for complying income streams purchased from 20 September.
This means the value of some people’s assets will increase as calculated under the assets test.
“While having some areas that are complementary, the provisions of the social security means test and those embodied in the SIS (Superannuation Industry Supervision) Act are intended to address different areas of Government policy,” Minister for Families, Community Services and Indigenous Affairs Mal Brough said.
“The means test helps to keep the income support safety net sustainable, thereby allowing income support payments to be directed towards those who are most in need.”
Other exemptions will be given for an SMSF member who wants to close a fund due to administrative obligations becoming more difficult in old age and needs to rollover to a new ATE income stream.
Another will be given for unsatisfactory administration by a large fund, leading to a member wishing to exercise choice and move to a new fund.
Another will be given when a super fund trustee changes the product features of a term allocated pension and the product no longer meets the members’ needs or expectations.
“This is a good result for many Australians who want to move within the better super regime – it adds to the choice options,” Gilbert said.
“For industry, these changes clarify a number of critical unfinished better super business items leading up to the 20 September 2007 deadline for income streams and will help to facilitate the better delivery of services to consumers.”
