The Government has released its Discussion Paper in respect of how Superannuation Law currently restricts the availability of relevant and appropriate income stream products in the Australian market.

The Government is also seeking consultation in respect of three areas:

  • the regulatory arrangements for superannuation income streams:
    • the types of income stream products that would enable retirees to better manage risk in the retirement phase;
    • whether the annuity and pension rules constitute an impediment to the development of new products;
    • changes that could be made to the annuity and pension rules to accommodate a wider range of income stream products while having regard to the need to protect against abuse of the earnings tax exemption and to promote appropriate and prudent retirement income objectives; and
    • whether such changes would lead to new products being brought onto the market;
  • deferred lifetime annuities (DLA):
    • whether people should only be able to purchase a DLA with superannuation money and/or for an up-front premium or some other purchase option;
    • whether there should be an upper limit on the amount that can be invested in a deferred lifetime annuity?
    • whether there should be a minimum deferral period and/or maximum deferral age or period for a DLA;
    • whether payment features described in the Discussion Paper strike the right balance in allowing people to insure against longevity risk while avoiding unnecessary restrictions on product development; and
    • whether DLA providers should be able to offer a death benefit and if so, any restrictions on the size of the death benefit that should be considered; and
  • the minimum payment amounts for account-based income streams:
    • whether the current minimum payment amounts for account-based products are appropriate;
    • whether there should be an automatic mechanism for adjusting the minimum drawdown amounts in response to significant adverse or very strong investment market performance and if so, what should that mechanism be;
    • whether any automatic mechanisms should be subject to specific maximum periods before reverting back to the original minimum drawdown amounts;
    • whether other issues need to be considered if the minimum drawdown amounts should fluctuate.

The closing date for submissions is 5 September 2014.