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SENATOR NICK SHERRY

SHADOW MINISTER FOR RETIREMENT INCOMES AND SAVINGS

MEDIA RELEASE

24 June 2004

DIY SUPER BUDGET MEASURE - SECOND BACKDOWN IN 3 WEEKS

A second backdown from the Liberal Government was announced yesterday by Senator Coonan: first a “clarification”, now a “review” and a deferral for a year.

The budget measure effectively banned DIY funds from providing defined benefit pensions when a person retires by requiring a fund that offers a defined benefit pension to have at least 50 members (Coonan Media Release C038/04, 11 May 2004).

DIY’s are not permitted to have more than 5 members so they would be forced to transfer their funds to a life company.

The first backdown was announced on 1 June 2004 (Coonan Media Release CO47/04) when the Minister, Senator Coonan, admitted the Government got it wrong and failed to realise a new pension product would not be available until 4 months after the announced changes take effect!

The second backdown was announced yesterday (Coonan Media Release CO54/04) with Minister Coonan announcing:

• that the regulations would take effect from 30 June 2005 not 11 May 2004. No details of lost revenue were made available.

• A “review” to examine whether or not a DIY super fund could continue to operate a defined benefit pension - reporting by April 2005 - after the election.

The Howard Liberal Government failed to think through the consequences of its budget announcement.

It has caused major uncertainty to the retirement plans of 523,000 DIY fund members in 381,845 small super funds.

There has been a major backlash from DIY fund members, often small business operators.

Labor has referred the regulations to the Senate Economics Legislation Committee for a public hearing.

For more information or comment please contact: Senator Nick Sherry 0418 482 807 or Lana Joyce 0414 505 989