On 20 December 2005, the Government announced the release of the final regulations to implement its response to the review of pensions in small superannuation funds. The regulations take effect from 1 January 2006.
The regulations were finalised following public consultation on draft regulations during November 2005. The regulations (the Retirement Savings Accounts Amendment Regulations 2005 (No.4) and the Superannuation Industry (Supervision) Amendment Regulations 2005 (No.7)) are available on the Federal Register of Legislative Instruments website at www.frli.gov.au. The explanatory statements relating to the regulations can also be found on this latter website.
The regulations update the allocated pension and annuity draw down factors in line with current life expectancy. The new factors apply to allocated pensions and annuities with a commencement day on or after 1 January 2006. Transitional provisions enable income stream providers to use the old factors for payments made until 30 June 2006.
The regulations also extend the maximum term of a market linked income stream, so that payments may continue until the recipient reaches age 100 (or until the recipient’s spouse reaches age 100). The change applies to market linked pensions and annuities with a commencement day on or after 1 January 2006. Similarly, the regulations extend the maximum term for other life expectancy income stream products with a commencement day on or after 1 January 2006.
In addition, the regulations allow annual payments from market linked income streams to vary between plus or minus 10 per cent of the payments calculated under the usual payment rules. This change applies to market linked income streams regardless of their commencement day.