Assistant Treasurer and Minister for Financial Services, Stephen Jones, said individuals would now be able to exit certain legacy retirement products that are no longer fit for purpose and transition to more modern options that better meet their needs.

The regulations that have commenced will remove barriers to allow individuals to exit these products at any stage over the next five years and help retirees access capital that would otherwise be locked in the system.

These changes are in effect, with the five‑year commutation window closing on 7 December 2029. The more flexible access to reserves will remain an ongoing improvement to the superannuation system.

Minister Jones said as announced by the former government in the 2021–22 budget, social security treatment will not be preserved for those who choose to transition out of their legacy retirement product. However, no debts will arise from the re‑assessment of these products’ asset values for the period before conversion.

Tim Miller, head of education for Smarter SMSF, said this was an expected addition to the new regulations, however, it is not possible without further legislative change.

“The point being that when an ATE income stream is commuted outside the conditions set out within the Social Security Act the income stream is deemed to have never been ATE and results in an individual's entitlements being re-calculated as far back as five years, which in many instances will mean individuals have been overpaid and as such as debt is raised,” he said.

“Historically, when there has been a change to the ATE rules the government has released a legislative instrument that provides for a debt waiver. This announcement alludes to the likelihood of this instrument to follow soon. It is not a green light for ATE pensions to be commuted yet.”