A bill amending retirement income legislation is now law, with several changes made to the legislative framework surrounding retirement income and social security receiving Royal Assent late last week.
The Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018 amends the Social Security Act 1991 and the Veterans' Entitlements Act 1986 to establish new means test rules to accommodate the development of new innovative income streams, such as deferred income streams and pooled investment pensions and annuities, which would also support the development of CIPRs.
According to the bill's explanatory memorandum, the changes will amend the current rules for lifetime income streams to create fairer, more equitable means test outcomes.
Under the new rules:
- 60% of annual payments will be assessed as income, and
- 60% of the purchase amount will be assessed as an asset before a person's threshold day (currently age 84), or a minimum of 5 years, after which 30% will be assessed as an asset for the rest of the person's life.
The EM goes on to explain that the existing means test rules for lifetime income streams were not appropriate for the "wide possible range" of complex products the parliament expects to emerge under SIS regulations changes in the future. If those means test rules were to continue under those changes, the income support system would be open to exploitation, the EM said and could "distort people's financial decisions in retirement."
As a result, the new means test rules - according to the Parliament - strike a balance between encouraging the development of lifetime income stream products and ensuring that the assessment of lifetime income streams is fair and reflects the value of the products.
The amendments also expands access to the Pension Loans Schemes and increases the Work Bonus to $300 per fortnight, an also extends the Work Bonus to include income from self-employment and work undertaken as an independent contractor or consultant.