Sean Fannin, GBST’s Technical Legislation Consultant reviews the latest legislation that could affect wealth management administration platforms.
What legislation is affected?
Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021
Certain superannuation pensions and annuities are subject to rules that determine minimum and maximum amounts to be paid in a financial year. A minimum amount must be paid each year for pensions or annuities commenced on or after 1 July 2007. For many retirees, the significant losses in financial markets as a result of the COVID-19 crisis is having a negative effect on the account balance of their superannuation pension or annuity. As part of the Australian Government’s economic response to the COVID-19 pandemic, the government reduced the minimum income stream benefit payment rates that must be paid by a superannuation fund trustee.
What has changed?
On 29 May 2021, Scott Morrison, Josh Frydenberg, and the Minister for Superannuation, Financial Services, and the Digital Economy, and the Minister for Women’s Economic Security, Jane Hume, announced the extension of the temporary reduction of the minimum income stream benefit payment rates.
On 24 June 2021, the Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021 was registered. The legislative instrument makes amendments extending the temporary reduction in the minimum income stream benefit payment amounts for account-based pensions and annuities, allocated pensions and annuities, and market-linked income streams for the 2021/22 financial year.
Who will this impact?
Account-based/allocated pensions and annuities
The minimum income stream paid by superannuation fund trustees using account-based pensions or annuities and allocated pensions or annuities will be reduced by 50% for the 2021/22 financial year.
The minimum income stream benefit payment is rounded to the nearest $10 unless the amount ends in an exact $5, in which case, the benefit payment is rounded up to the next whole $10.
Market-linked income streams
The amount paid from a market-linked income stream can generally be no less than 10% or not greater than 10% of the amount calculated using the relevant payment factors.
The amendments made by the Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021 extends into the 2021/22 financial year if it meets specific criteria. This includes:
- 45% or more of the amount calculated using the relevant payment factors is paid
- Less than 110% of the amount calculated using the relevant payment factors is paid
Sources for more information
Joint Media Release – The Prime Minister, the Hon. Scott Morrison MP, the Treasurer, the Hon. Josh Frydenberg MP, and the Minister for Superannuation, Financial Services and the Digital Economy, and the Minister for Women’s Economic Security, Senator the Hon. Jane Hume – Supporting Retirees with Extension of the Temporary Reduction in Superannuation Minimum Drawdown Rates:
Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021:
https://www.legislation.gov.au/Details/F2021L00833
Superannuation Industry (Supervision) Regulations – Schedules 1A, 1AAB, 6, and 7:
http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_reg/sir1994582/sch1a.html
http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_reg/sir1994582/sch1aab.html
http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_reg/sir1994582/sch6.html
http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_reg/sir1994582/sch7.html
Disclaimer
The material included in this blog is designed and intended to provide general information in summary form on a topic which is current at the time of publication. The material may not apply to all jurisdictions. The contents are not intended to constitute legal, business or other professional advice. It is provided as general information only and is not intended to be comprehensive or a substitute for advice from a qualified professional such as a solicitor. Formal legal advice should be sought in particular matters. GBST Holdings Limited ACN 010 488 874 (“GBST”) makes no statements, representation or warranties about the accuracy or completeness of the information and you should not rely on it. GBST’s blogs may sometimes contain links to other websites for further information. GBST makes no representation or warranty as to the accuracy or validity of information or material on those sites. GBST is not liable for content on those websites. GBST will not be liable to you or any other person for any loss or damage (whether direct, indirect, consequential or economic), however caused and whether by negligence or otherwise, which may result directly or indirectly from reliance on information contained in GBST’s blog.
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Posted in: Wealth Management Administration
