In its response to the Financial System Inquiry, the government agreed to “introduce a mechanism to facilitate the rationalisation of legacy products in the life insurance and management investment fund sectors”.

The government said it would explore how some of the existing tax implications of transitioning away from a legacy product could be removed and how some of the other consumer, constitutional and fiscal issues could be addressed.

The response by the government stressed that “consumers should not be worse off due to any transition to a newer product”.

“This [action by the government] should be a good thing for investors generally, particularly if it’s an SMSF who’s an investor in these old-style closed products,” said Mr Hallinan.

“Product issuers would [also] much prefer investors get out of these products or to move investors across to a more modern product open to other investments and investors.”

Mr Hallinan said SMSF trustees are likely to be paying higher fees in these older-style products and potentially higher administration costs given that it is costly for product issuers to continue to run these closed products.

“Product issuers have to support these closed products through their computer systems and so forth, so it becomes very expensive for them to maintain these products,” he explained.

Read more:

Major real estate group ramps up super business

Investors warned on slowing market growth