While the focus of the Government’s response to the Financial System Inquiry (Murray Review) has been the decision to continue limited recourse borrowing, there are, from a superannuation perspective, two sleeper issues and one known unknown.
The first sleeper issue is “CIPR” which stands for “comprehensive income product for retirement”. The Government intends to alter policy and tax settings to permit such products to be developed and issued by super funds. Possibly CIPR will be the “MyPension” product. It seems these products will be a hybrid of an account-income stream with a deferred annuity. SMSFs will not be required or permitted to issue these products.
The second sleeper issue is the rationalisation of legacy life insurance and managed investment products. The Government will remove approval hurdles and alter tax settings to permit legacy (old fashioned, sub-scale) investment products to be converted into current products thereby offering cost savings to the product issuers and scale advantages.
The ‘known unknown’ is the comment by the Review to consider aligning the earnings tax between accumulation and retirement phases and to better integrate super and age pension systems. The Review made no recommendation but left this issue for the Tax Review.
Media Enquiries:
Michael Hallinan
Special Counsel
Townsends Business & Corporate Lawyers
(02) 8296-6205
Twitter: @TownsendsLaw
michael[at]townsendslaw.com.au
townsendslaw.com.au