This year’s Federal Budget reconfirms the Government’s position to amend legislation to allow people to make commutation from certain non-commutable income streams where they have an excess transfer balance amount.
Speaking to Super Review, Tim Howard, BT advice technical and regulatory, said the changes helped those who might have stopped, for example, a term allocated pension since 1 July, 2017, then recommenced and fallen under new rules, giving them an excess transfer balance account credit.
“And this allows them to move that excess out of that product, when previously they wouldn't be able to do that.
“So people are trapped. They've got an excess; they can't take the money out. This will effectively allow them to do that.
“It fixes an anomaly.”
Further details could be found in Treasury Laws Amendment (Allowing Commutation of Certain Income Streams) Regulations 2022 and the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022 (currently going through Parliament).
Howard defined the changes as distinct from those announced in last year’s Budget, which would, once introduced, allow individuals to exit specific legacy retirement income products over a limited two-year period, allowing them to move into an account-based pension.
He said last year’s changes, which would allow people to move out of these income streams permanently, should be in place by next financial year, but there was yet to be any official word.
According to Howard, the changes would go through without contest but may be stalled if the changes were not made before an election got called.