CA ANZ, CPA Australia and other professional associations have long argued that individuals with money trapped in outdated pensions and annuities should be afforded the ability to cease these financial products without penalty or administrative complexity. We are pleased that the current government has decided to proceed with this policy, with some slight adjustments compared to the original May 2021 announcement.

The adjustments to extend the original two-year timeframe to restructure pensions and annuities to five years and include allocations from reserves (regardless of why that reserve has been established) towards a person’s non-concessional contribution cap are useful and represent an improvement on the original policy design.

We note that many legacy income streams also have concessions under the Social Security system and acknowledge that the Treasury is not the responsible department for the administration of the social security treatment, however an announcement confirming this fundamental aspect needs to be made.

Finally, we believe there may be occasions when the commutations of legacy pensions can lead to a negative debit for Transfer Balance Accounts (TBA) which might mean that a person’s TBA credit balance increases. This would typically arise for reversionary pensions. We ask that such anomalies be addressed before Draft Regulations are finalised.