These regulations aim to give effect to the Government's decision, announced on 27 September 2005, on the outcome of the review of pensions in small superannuation funds. The regulations are intended to take effect from 1 January 2006.
- extend the maximum term of the market linked and other life expectancy income streams so that payments continue until the recipient reaches age 100 (or until a person's spouse reaches age 100)
- allow annual payments of the market linked income stream to vary between plus or minus ten per cent of what would have been calculated under the normal payment rules
- update allocated pension (and annuity) drawdown factors in line with current life expectancy, effective from 1 January 2006.
The regulations specify a few matters that were not covered in the Government's announcement on the review. The smoothing mechanism has been extended to existing market linked income streams. The amendments define account balance for market linked and allocated pensions to include attributable fund reserves. Providers will also have the opportunity to use old allocated pension and annuity factors until 30 June 2006, avoiding the need for systems and documents to be updated by 1 January 2006. The drafts also contain a number of minor technical matters to ensure consistency between pension standards for retirement savings accounts and superannuation funds.
Comments can be made about errors, omissions, clarity, coherency, consistency and implementation matters. Your comments will be taken into account before the regulations are finalised.