There is a realistic possibility transition-to-retirement (TTR) strategies could be eliminated entirely due to the added complexity associated with them as a result of the changes to the superannuation rules to be introduced from July 2017, according to a retirement savings technical expert.
“The reason being the new rules are actually incredibly complicated for large funds to try and administer and the cost will be exorbitant to do it,” Colonial First State executive manager Craig Day told the Association of Financial Advisers 2016 National Adviser Conference in Canberra.
“There is some suggestion funds may simply stop offering TTRs beyond 1 July next year. So there may not even be a product that you can use.”
Day said it was hoped the government would recognise the problem and adopt a different method to achieve the same outcome TTRs currently provided, but in a simpler and more cost-effective way.
He pointed out it was only larger superannuation funds facing this difficulty and TTR strategies remained problem-free for SMSFs.
However, the entire superannuation landscape naturally would be affected if the government banned TTR strategies altogether, he said.