Treasury has released an exposure draft that will follow through with commitments by the previous government to provide greater certainty for superannuation fund members.
Specifically, the proposed measures clarify that a tax integrity rule will not be triggered when superannuation benefits are rolled over to another fund as part of a merger between funds.
Australian Institute of Superannuation Trustees chief executive Tom Garcia welcomed the announcement from Treasury.
"With expectations that industry consolidation will continue, providing capital gains tax loss relief for merging funds importantly protects the retirement savings of the members of these funds from any adverse tax impacts," Mr Garcia said.
Speaking to InvestorDaily, Association of Superannuation Funds of Australia chief executive Pauline Vamos was more circumspect.
"We’ve been pushing this for a long time because it really is a quite significant impediment to funds – particularly if there is a market adjustment," Ms Vamos said.
"But there’s another piece to this," she said. "At the moment, when funds merge, if I started a pension with a fund and my fund merges, the current social security laws mean that you are assessed as starting the pension again."
The social security issue is particularly salient given more and more funds will have a higher number of pension recipients in future years, Ms Vamos said.
Speaking about the state of the superannuation sector more generally, Ms Vamos said that while MySuper has largely been bedded down, there is still uncertainty about the Fair Work Australia default fund selection process and governance issues.
While the Treasury announcement is significant, it will not have a major impact on merger activity, she said.
"Certainly, funds are always looking for mergers," Ms Vamos said. "Mergers aren’t necessarily about getting out of the market; mergers are more often about growth," she said.
"And organic growth is difficult in the current environment. Funds are looking at how can we grow through account consolidation and how can we grow through mergers and acquisitions?" Ms Vamos said.
