House of Representatives

Superannuation (Objective) Bill 2016

Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016

Superannuation (Excess Transfer Balance Tax) Imposition Act 2016

Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon Scott Morrison MP and Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)

Chapter 10 - Innovative income streams and integrity

Outline of chapter

10.1 Schedule 8 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 (the TLA Bill) amends the earnings tax exemptions for complying superannuation funds, RSA providers and life insurance companies in the Income Tax Assessment Act 1997 (ITAA 1997) to:

·
extend the earnings tax exemption to new lifetime products such as deferred products and group self-annuities;
·
remove the earnings tax exemption in respect of transition to retirement income streams (TRISs); and
·
introduce an integrity measure that will apply to self-managed superannuation funds (SMSFs) and small Australian Prudential Regulation Authority (APRA) funds to support the operation of the transfer balance cap measure.

10.2 For the purposes of this Chapter, references to a TRIS will generally also include a transition to retirement income pension (TRIP), a non-commutable allocated pension and a non-commutable allocated annuity.

10.3 All references in this Chapter are to the ITAA 1997 unless otherwise specified. All legislative amendments referred to in this Chapter are contained in the TLA Bill 2016.

Context of amendments

10.4 The Government's 2016-17 Budget Superannuation Reform Package included measures to enhance the flexibility and integrity of the superannuation system. These measures will:

·
remove tax barriers to the development of innovative income stream products by extending the earnings tax exemption to new lifetime products such as deferred products and group self-annuities;
·
strengthen the integrity of superannuation income streams by removing the earnings tax exemption in respect of TRISs; and
·
prevent SMSFs and small APRA funds, where one or more members have a superannuation interest in the retirement phase and a total superannuation balance of over $1.6 million from using the segregated assets method to calculate earnings tax exemptions.

10.5 These measures seek to balance the integrity of the superannuation reform package, while maintaining the flexibility for trustees to operate their funds and manage funds' compliance costs.

Innovative retirement income products

10.6 In May 2016 the Government announced its response to the Retirement Income Streams Review and released its final report as part of the 2016-17 Budget.

10.7 The Government announced that it would remove tax barriers to the development of new retirement income products by extending the earnings tax exemption to new lifetime products such as deferred products and group self-annuities.

10.8 Currently, the earnings tax exemption provisions do not cover deferred products that may delay the commencement of annuity or pension payments for a number of years. This reflects the current annuity and pension standards in the Superannuation Industry (Supervision) Regulations 1994 (SISR 1994) that require all superannuation income streams to make at least an annual superannuation benefit payment. These standards limit income stream product development, which then limits opportunities for individuals to better manage consumption and longevity risk in retirement.

10.9 Related regulations will amend the annuity and pension standards in the SISR 1994 to facilitate the development of new innovative retirement income products including deferred products and group self-annuities.

Transition to retirement income streams

10.10 The SISR 1994 and the Retirement Savings Accounts Regulations 1997 (RSAR 1997) currently permit individuals who have reached preservation age, but not retired from the workforce or attained age 65, to draw down their pension or annuity through commencing a TRIS, a transition to retirement income pension (TRIP) or a non-commutable allocated pension or non-commutable allocated annuity.

10.11 Non-commutable allocated pensions and non-commutable allocated annuities are old-style TRISs that were offered by superannuation funds between 1 July 2005 and 20 September 2007.

10.12 TRISs were intended to assist older individuals transition to retirement by supplementing reduced income from decreased working hours with payments from a superannuation income stream. However, they have also been used for the sole purpose of achieving tax advantages. For example, individuals can enliven the earnings tax exemption by commencing a TRIS, thus saving up to 15 per cent on earnings. They can also salary sacrifice income into superannuation and draw down their account balance by commencing a TRIS to receive income taxed at a concessional rate but not reduce their working hours. Further, individuals may elect to treat superannuation income stream benefits as lump sums, which are tax-free up to the low rate cap of $195,000.

10.13 Related regulations will remove this election in regulation 995-1.03 in the Income Tax Assessment Regulations 1997 (ITAR 1997) so that individuals are no longer able to treat superannuation income stream benefits as superannuation lump sums.

Excluding SMSFs and small APRA funds with members with large balances from segregating assets

10.14 The introduction of the transfer balance cap will mean that some individuals will be required to reduce the value of their interests in the retirement phase to $1.6 million. Most will rollback some or all of their excess to the accumulation phase. If funds with members in both the pension and accumulation phase use the segregated assets method to determine their earnings tax exemption, assets can be cycled between the segregated pools for each phase to avoid capital gains tax.

10.15 These funds will now be required to use the proportioning method to determine their earnings tax exemption.

Summary of new law

10.16 Schedule 8 to the TLA Bill amends the earnings tax exemption provisions of the ITAA 1997 that treat income earned from assets that fund current pension liabilities as exempt income of a complying superannuation fund, RSA provider or life insurance company.

10.17 The earnings tax exemption will be extended to new innovative retirement income products that are deferred superannuation income streams (including guaranteed annuities and group self-annuities) and will no longer be available in respect of TRISs.

10.18 In order to implement these changes, the earnings tax exemption provisions are reframed so that they no longer refer to superannuation income stream benefits that are payable at the time. Instead, the earnings tax exemption will be applied when a superannuation income stream is in the 'retirement phase' at the time.

10.19 A superannuation income stream will be in the retirement phase at a time if:

·
a superannuation income stream benefit is payable from it at the time; or
·
in the case of a deferred superannuation income stream - a superannuation income stream benefit is payable at a later time and the person who will receive the benefit has satisfied a relevant nil condition of release.

10.20 However, a superannuation income stream will not be in the retirement phase if it is a TRIS.

10.21 A superannuation income stream will also not be in the retirement phase for an income year if a superannuation income stream provider has failed to comply with a commutation authority in respect of a member's transfer balance cap.

10.22 The earnings tax exemption provisions are also amended so that SMSFs and small APRA funds are not able to use the segregated assets method in section 295-385 to determine their earnings tax exemption in certain circumstances.

Comparison of key features of new law and current law

New law Current law
Earnings tax exemption provisions
The earnings tax exemption provisions for complying superannuation funds, RSA providers and life insurance companies in the ITAA 1997 will apply to superannuation income streams that are in the retirement phase. This will cover superannuation income streams that are payable at that time and also deferred superannuation income streams where a person to whom a benefit is payable or will be payable has retired, has a terminal medical condition, is permanently incapacitated or has attained age 65.

A superannuation income stream is not in the retirement phase if it is a TRIS, or if a superannuation income stream provider has failed to comply with a commutation authority in respect of a member's transfer balance cap.

The earnings tax exemption provisions for complying superannuation funds, RSA providers and life insurance companies in the ITAA 1997 apply to superannuation income stream benefits that are payable at a time.

SMSFs and small APRA funds
SMSFs and small APRA funds will not be able to use the segregated method to determine their earnings tax exemption for an income year if:

·
at a time during the income year, there is at least one superannuation interest in the fund that is in the retirement phase; and
·
just before the start of the income year:

-
a person has a total superannuation balance that exceeds $1.6 million; and
-
the person is the retirement phase recipient of a superannuation income stream (whether or not the fund is the superannuation income stream provider for the superannuation income stream).

Under Subdivision 295-F, all complying superannuation funds including SMSFs and small APRA funds can use both the segregated and proportional methods to determine their earnings tax exemption on assets that are used to discharge liabilities in respect of current pension liabilities.

Detailed explanation of new law

Background

10.23 Currently, Subdivision 295-F and Division 320 give complying superannuation funds, RSA providers and life insurance companies an earnings tax exemption on income from assets that support currently payable pension and annuity liabilities.

10.24 These provisions are broadly framed in terms of liabilities to provide superannuation income stream benefits (or related concepts) that are currently payable.

10.25 A superannuation income stream benefit is a payment from a superannuation income stream. A superannuation income stream is an income stream that is taken to be an annuity or pension in accordance with the SISR 1994 and RSAR 1997. Annuities and pensions must comply with the minimum standards set out in regulations 1.05 and 1.06 of the SISR 1994 and regulation 1.07 of the RSAR 1997.

10.26 In order to extend the earnings tax exemption to new innovative retirement income products that are deferred superannuation income streams (including guaranteed annuities and group self-annuities), and to remove the earnings tax exemption in respect of TRISs, it is necessary to reframe the earnings tax exemption provisions so that they no longer require superannuation income stream benefits to be currently payable.

10.27 This is because the earnings tax exemption:

·
will apply to deferred superannuation income streams prior to superannuation income stream benefits being payable, and
·
will no longer be available for TRISs even when superannuation income stream benefits are currently payable.

Retirement phase

10.28 Schedule 8 to the TLA Bill amends the ITAA 1997 so that the earnings tax exemption provisions now apply to complying superannuation funds, RSA providers and life insurance companies if a superannuation income stream is in the 'retirement phase' .

10.29 A superannuation interest will be in the retirement phase at a time if it supports a superannuation income stream that is in the retirement phase at that time. [Schedule 11, item 9, paragraph (b) of the definition of 'retirement phase' in subsection 995-1(1)]

10.30 A superannuation income stream will be in the retirement phase if a superannuation income stream benefit is payable from it at that time. [Schedule 11, items 1 and 9, subsection 307-80(1) and paragraph (a) of the definition of 'retirement phase' in subsection 995-1(1)]

10.31 A superannuation income stream is also in the retirement phase at a time if it is a deferred superannuation income stream and a superannuation income stream benefit will be payable from it to a person after that time, and the person has retired, has a terminal medical condition, is permanently incapacitated or has attained the age of 65. This exception is for deferred superannuation income streams that are not currently payable. [Schedule 11, items 1 and 9, subsection 307-80(2) and the definition of 'deferred superannuation income stream' in subsection 995-1(1)]

10.32 A deferred superannuation income stream has the meaning given by the SISR 1994. [Schedule 11, item 9, the definition of 'deferred superannuation income stream' in subsection 995-1(1)]

10.33 'Deferred superannuation income stream' will be defined in the SISR 1994 as part of related regulations that will amend the annuity and pension standards in the SISR 1994 to facilitate the development of the new innovative retirement income products.

10.34 A deferred superannuation income stream (which will include guaranteed annuities and group self-annuities) will be a superannuation income stream where the rules governing the income stream meet these new standards.

10.35 If an individual purchases a deferred superannuation income stream prior to meeting one of the relevant nil conditions of release, the earnings tax exemption will not apply until one of the conditions is met. If an individual satisfies a condition of release prior to purchase (e.g. retirement), the earnings tax exemption will apply from the purchase date.

10.36 For example, where an individual purchases a deferred pension from the age of 55 that pays an income stream from the age of 80, the earnings tax exemption will apply from the date the individual satisfies a condition of release such as retirement or attaining the age of 65. Where an individual purchases a deferred pension at the age of 70 that pays an income stream from the age of 80 the earnings tax exemption will apply from the purchase date.

10.37 A superannuation income stream will not be in the retirement phase if it is a TRIS, a TRIP, a non-commutable allocated annuity or a non-commutable allocated pension. [Schedule 11, item 1, subsection 307-80(3)]

10.38 A superannuation income stream will also not be in the retirement phase in an income year if a superannuation income stream provider has failed to comply with a commutation authority in respect of a member's transfer balance cap. For further discussion see paragraphs 3.191 to 3.197. [Schedule 11, item 1, subsection 307-80(4)]

Earnings tax exemption provisions for complying superannuation funds

10.39 Complying superannuation funds will receive the earnings tax exemption in respect of retirement phase (RP) superannuation income stream benefits of the fund at the time. [Schedule 8, items 1 to 3 and 6 to 8, paragraphs 295-385(3)(a) and (4)(a), subsections 295-385(5), 295-390(3) and (7) and 295-395(2)]

10.40 A superannuation income stream benefit is an RP superannuation income stream benefit of a superannuation fund if it is payable by the fund at that time from a superannuation income stream that is in the retirement phase at that time. [Schedule 11, items 1 and 9, subsection 307-75(1) and the definition of 'retirement phase superannuation income stream benefit (or RP superannuation income stream benefit)' in subsection 995-1(1)]

10.41 A superannuation income stream benefit is also an RP superannuation income stream benefit of a superannuation fund at a time if it is payable by the fund after that time from a superannuation income stream that is a deferred superannuation income stream and is in the retirement phase at that time. [Schedule 11, items 1 and 9, subsection 307-75(2) and the definition of 'retirement phase superannuation income stream benefit (or RP superannuation income stream benefit)' in subsection 995-1(1)]

Earnings tax exemption provisions for RSA providers

10.42 RSA providers will receive the earnings tax exemption in respect of a covered superannuation income stream. A superannuation income stream will be covered if it is a pension (within the meaning of the Retirement Savings Accounts Act 1997 ) and it is in the retirement phase. [Schedule 8, items 10 and 11, sections 295-405 and 295-407, and paragraph 295-410(a)] Earnings tax exemption provisions for life insurance companies

10.43 Life insurance companies will receive the earnings tax exemption in respect of RP superannuation income stream benefits:

·
where an exempt life insurance policy is held by a trustee of a complying superannuation fund; and
·
in respect of annuities that are superannuation income streams that are in the retirement phase. [Schedule 8, items 15 to 18, items 20 to 25, paragraphs 320-137(3)(d) and (3)(e), subsection 320-137(3A), paragraph 320-246(1)(a), subparagraphs 320-246(1)(b)(i) and (1)(e)(ii) and paragraphs 320-246(1)(ea), 320-247(1)(a) and 320-247(2)(a)]

Life insurance companies - consequential amendments

10.44 Life insurance policies that are held to support superannuation income stream benefits paid from a TRIS will no longer be exempt life insurance policies because a superannuation income stream will not be in the retirement phase if it is a TRIS. If a superannuation income stream provider fails to comply with a commutation authority in respect of a member's transfer balance cap, the superannuation income stream will also no longer be an exempt life insurance policy because it will not be in the retirement phase. [Schedule 11, item 1, subsection 307-80(3) and (4)] As such, these policies will be reclassified as complying superannuation life insurance policies.

10.45 As a consequence of this reclassification, a life insurance company may need to transfer assets supporting these policies from its segregated exempt assets to its complying superannuation asset pool. Consequential amendments will allow life insurance companies to transfer assets in these circumstances without triggering unintended tax consequences. [Schedule 8, items 19, 26 and 27, subsections 320-185(4) and 320-250(1A) and paragraph 320-255(1)(a)]

10.46 The definition of 'complying superannuation life insurance policy' is amended so that it includes an immediate annuity directly held by an individual if it is a superannuation income stream that is not in the retirement phase, for example a TRIS. [Schedule 11, item 8, the definition of 'complying superannuation life insurance policy' in subsection 995-1(1)]

10.47 Annuities that are deferred superannuation income streams that are not yet in the retirement phase (because the individual has not met a relevant nil condition of release) are complying superannuation life insurance policies. Where the annuity is directly held by an individual it will be covered under subparagraph (b)(i) of the definition of 'complying superannuation life insurance policy' in subsection 995-1(1) because it is not presently payable.

10.48 Annuities that are deferred superannuation income streams that are in the retirement phase are exempt life insurance policies. This is because they will either be an immediate annuity that is a superannuation income stream that is in the retirement phase (presently payable), or because they will be an annuity that is not an immediate annuity that is a superannuation income stream that is in the retirement phase (has met a relevant nil condition of release but is not presently payable). [Schedule 8, item 23, paragraph 320-246(1)(ea)]

Superannuation death benefits

10.49 Subregulations 995-1.01(2) to (5) of the Income Tax Assessment Regulations 1997 (ITAR 1997) expand the meaning of the term 'superannuation income stream benefit' for the purposes of the earnings tax exemption provisions. These subregulations ensure that where a complying superannuation fund member was receiving a superannuation income stream immediately before their death, the superannuation fund will continue to be entitled to the earnings tax exemption in the period from the member's death until their benefits are cashed by paying them out as a lump sum and/or by commencing a new superannuation income stream.

10.50 These subregulations will continue to work as they currently do despite the earnings tax exemption provisions being reframed in terms of 'RP superannuation income stream benefits'. This is because an RP superannuation income stream benefit is defined in terms of a superannuation income stream benefit.

Excluding SMSFs and small APRA funds with members that have large balances from segregating assets

10.51 If a complying superannuation fund is covered by section 295-387, assets of the fund cannot be segregated for an income year. [Schedule 8, items 4 and 9, subsections 295-385(7) and 295-395(3)]

10.52 A complying superannuation fund will be covered by section 295-387 if:

·
at a time during the income year the fund is either an SMSF as defined by sections 17A and 17B of the Superannuation Industry (Supervision) Act 1993, or a fund with less than 5 members (generally known as a small APRA fund); and
·
at a time during the income year there is at least one superannuation interest in the fund in the retirement phase; and
·
just before the start of the income year:

-
a person has a total superannuation balance that exceeds $1.6 million;
-
the person is a retirement phase recipient of a superannuation income stream; and

·
at a time during the income year that person has a superannuation interest in the fund. [Schedule 8, item 5, section 295-387]

10.53 It will not be necessary for a person with an interest in the small fund to be receiving an income stream from that fund. A small fund will be excluded from using the segregated assets method where a member of the fund, with a total superannuation balance that exceeds $1.6 million, is a retirement phase recipient of an income stream from another superannuation income stream provider. [Schedule 8, item 5, subsection 295-387(2)(c)]

Example 10.1 : Individual with a large balance On 30 June 2017 Jeremy has a total superannuation balance of $2.1 million in retirement phase, with a $1.6 million allocated pension in an SMSF and a $500,000 allocated pension with ABC retail superannuation fund. On 1 July 2017 he rolls over $500,000 from his SMSF into a new SMSF as an accumulation interest.As Jeremy had a total superannuation balance exceeding $1.6 million on 30 June 2017, neither of the SMSFs he is a member of are able to calculate exempt income using the segregated method and must use the proportional method for the 2017-18 financial year. The retail superannuation fund is not affected and can use either method to calculate exempt income

10.54 Assets of funds covered by section 295-387 are known as disregarded small fund assets . Such assets cannot be segregated current pension assets for the purposes of section 295-385 or segregated non-current assets for the purposes of section 295-395. [Schedule 8, items 4, 5, and 9, sections 295-385, 295-387 and 295-395 and schedule 11, item 9, the definition of 'disregarded small fund assets' in subsection 995-1(1)]

10.55 As a result, these funds must calculate their earnings tax exemption for funding current pension liabilities of an income year under section 295-390, applying the proportionate method with no assets taken to be segregated to pay current or future liabilities. For clarity, if a complying superannuation fund which is not covered by section 295-387 uses the segregated method to undertake asset cycling to avoid tax, it may be subject to the general Part IVA anti avoidance provisions of the ITAA 1997.

10.56 A regulation will be made for the purposes of subsection 295-390(7) to determine liabilities in respect of account based income stream benefits for the proportionate method. This means that superannuation funds who use the proportionate method but whose only superannuation income stream benefit liabilities arise from account based superannuation income stream products will not be required to obtain an actuary's certificate for the purpose of determining their exempt current pension income.

Consequential amendments

Proportioning rule

10.57 Section 307-125 contains the proportioning rule for the taxation of superannuation benefits. Currently, if a superannuation benefit arises from the commutation of a superannuation income stream, the proportioning rule is applied when superannuation income stream benefits commence being made from the income stream.

10.58 The proportioning rule is amended so that if a superannuation income stream benefit arises from the commutation of a deferred superannuation income stream before the commencement day of the income stream, the rule is applied at the time just before the commutation occurred. [Schedule 8, item 14, paragraph 307-125(3)(c)]

Tax treatment of a lump sum payment arising from a partial commutation

10.59 Currently, an individual is able to elect under paragraph 995-1.03(b) of the ITAR 1997, before a payment is made, that the payment is not to be treated as a superannuation income stream benefit (making it a superannuation lump sum).

10.60 This election will be removed by a related regulation. This will ensure that individuals can no longer take advantage of the election by treating normal or regular pension payments as lump sums, thereby accessing tax-free amounts up to the low rate cap.

10.61 However, the removal of this election will have an unintended consequence for individuals who partially commute their superannuation income stream. These individuals will no longer be able to make an election that the payment is a superannuation lump sum, which means the payment will be a superannuation income stream benefit.

10.62 However, lump sum payments arising from a partial commutation should be treated for both tax and superannuation purposes as superannuation lump sums. While this is appropriate, it will have the effect of preventing a superannuation fund from claiming the earnings tax exemption under section 295-385 to the extent that assets will no longer be held 'solely' to discharge liabilities in respect of superannuation income stream benefits, as it has supported the payment of a lump sum.

10.63 A consequential amendment is made so that a lump sum payment arising from a partial commutation of a superannuation income stream is generally treated as a superannuation lump sum for the purposes of the ITAA 1997. However, for the purposes of the exempt income provisions in Subdivision 295-F a lump sum payment arising from a partial commutation of a superannuation income stream will be a superannuation income stream benefit. [Schedule 8, items 12 and 13, section 307-65 and subsection 307-65(2)]

Application and transitional provisions

10.64 The amendments in Schedule 8 commence on the start of the first day of the first quarter following Royal Assent [Item 4 in the table in section 2 of the TLA Bill]

10.65 The amendments in Schedule 8 apply in relation to the 2017-18 income year and later income years. [Schedule 8, item 28]

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016

10.66 Schedule 8 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

10.67 Schedule 8 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 amends the earnings tax exemption provisions in the Income Tax Assessment Act 1997 to extend the earnings tax exemption to new lifetime products such as deferred products and group self-annuities, and remove the earnings tax exemption in respect of transition to retirement income streams (TRIS). It will also introduce an integrity measure that will apply to self-managed superannuation funds (SMSFs) and small Australian Prudential Regulation Authority funds to support the operation of the transfer balance cap measure.

Innovative retirement income products

10.68 Currently, the earnings tax exemption provisions do not cover deferred products that delay the commencement of annuity or pension payments for a number of years. This reflects the current annuity and pension standards in the Superannuation Industry (Supervision) Regulations 1994 that require all superannuation income streams to make an annual superannuation benefit payment. These standards limit opportunities for individuals to better manage consumption and longevity risk in retirement.

Transition to retirement income streams

10.69 TRIS were intended to assist older individual's transition to retirement by supplementing reduced income from decreased working hours with payments from a superannuation income stream. However, they have also been used for the sole purpose of achieving tax advantages. For example, individuals can access the earnings tax exemption in the fund by commencing a TRIS, thus saving up to 15 per cent on earnings. They can also salary sacrifice income into superannuation and draw down their account balance by commencing a TRIS to receive income taxed at a concessional rate but not reduce their working hours. Further, individuals may elect to treat superannuation income stream benefits as lump sums, which are tax-free up to the low rate cap of $195,000.

Excluding SMSFs and small APRA funds with members with large balances from segregating assets

10.70 The introduction of the transfer balance cap will mean that some individuals will be required to reduce the value of their interests in the retirement phase to $1.6 million. Most will rollback some or all of their excess to the accumulation phase. If funds with members in both the pension and accumulation phase use the segregated assets method to determine their earnings tax exemption, assets can be cycled between the segregated pools for each phase to avoid capital gains tax.

10.71 These funds will now be required to use the proportioning method to determine their earnings tax exemption.

10.72 The Parliamentary Joint Committee on Human Rights has previously noted that the area of superannuation is likely to engage the right to social security in article 9 and the right to an adequate standard of living in article 11 of the International Covenant on Economic, Social, and Cultural Rights (ICESCR).

10.73 Australia's retirement income system consists of three elements commonly referred to as the three pillars: the age pension, compulsory superannuation contributions, and voluntary savings including voluntary contributions to superannuation.

10.74 The first pillar, the age pension, provides for a minimum safety net of income in retirement, and is the primary method through which Australia meets its obligations under article 9 of the International Covenant on Economic, Social, and Cultural Rights and article 11 as far as it relates to income in retirement.

10.75 This Schedule falls within the pillars of mandatory and voluntary superannuation contributions.

10.76 These changes seek to balance the integrity of the superannuation reform package, while maintaining the flexibility for trustees to operate their funds and manage funds' compliance costs. These changes will not prevent affected individuals from using superannuation to support an adequate standard of living in retirement.

10.77 Removing barriers to innovative income stream products offers Australians more flexibility and may increase retirement incomes.

Human Rights implications

10.78 This Schedule does not engage any of the applicable rights or freedoms as it facilitates the availability of new income stream products while improving the integrity of the superannuation reform package.

Conclusion

10.79 This Schedule is compatible with human rights as it does not raise any human rights issues.


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