27 September 2005
Macquarie Adviser Services' Head of Technical Services, David Shirlow, has welcomed today's announcement by the Minister for Revenue and Assistant Treasurer, Mal Brough, that the Government has decided to provide more flexibility to the term allocated pension.
Mr Brough today announced he would be extending the term of the Term Allocated Pension so that payments can continue until the member reaches age 100 (or until a person's spouse reaches age 100) and would allow retirees to choose some variation in the level of annual income from term allocated pensions.
Currently the term of a Term Allocated Pension is based on the life expectancy of the member or their life expectancy as if the member was five years younger. (A longer term is possible if the pension is a 'reversionary' pension).
Mr Brough also announced that the Government would also update the income draw down factors of standard allocated pensions in line with current life expectancy, better enabling retirees to draw down their capital over their whole retirement.
Mr Shirlow said the changes, so far as allocated pensions and Term Allocated Pensions are concerned, are very positive.
"The changes for term allocated pensions, commenced on or after 1 January 2006, will enable retirees to select longer terms than has been the case, giving them greater comfort that the income will last throughout their retirement," Mr Shirlow said.
"The Government is also introducing a degree of flexibility in the amount of income which can be drawn from term allocated pensions, which will help retirees smooth their income levels from year to year."
"The changes for allocated pensions, commenced on or after 1 January, will also enable these pensions to last longer, reflecting the improved longevity of Australians."
Mr Shirlow said that as the changes are scheduled to apply quite soon there is an need for Government and the super industry to consult soon to ensure we achieve a smooth transition.
For further information, please telephone:
Head of Technical Services
Macquarie Adviser Services
Tel: (612) 8232 6442
Head of PR & Communication
Macquarie Financial Services Group
Macquarie Funds Management Group
Tel: (612) 8232 3241
Mobile: (61) 417 260 309