The Government has released draft regulations as part of
the 2016 Budget changes (Treasury Laws Amendment (Fair and
Sustainable Superannuation) Regulations 2017).
There are some important changes in these draft regulations
(particularly for SMSFs), some expected and some not.
Superannuation death benefits can be rolled over in many
Partial commutations of pensions will no longer count towards
minimum pension payments.
Actuarial certificates will no longer be required for funds
paying pensions that are only allocated pensions, account based
pensions or market linked pensions.
Defined benefit funds can elect not to allow members to claim
tax deductions for personal contributions.
The prohibition on funds accepting contributions over the
fund-capped contribution limits is abolished (as the contribution
cap rules now allow for them to be refunded anyway).
For a market linked pension, the pension terms can allow them
to be partly commuted to remove an excess transfer balance, but
only to the extent of the actual or expected
The first two changes had been previously announced.
The last amendment is new and provides opportunities to commute
an otherwise non-commutable income stream. Also, if someone has
both market linked and account based pensions and together they
result in an excess transfer balance, under this proposed change
the market linked pension could be commuted back to accumulation
phase to remove even an expected excess leaving the account based
pension in place.
It is important to be aware that to commute a market linked
pension under these changes, more is required than to simply
commute the pension. The amendments allow the pension terms to
allow a commutation, so first the pension terms must be amended to
allow for the commutation. This could provide some issues,
depending on the wording of the trust deed and pension terms.
Many of these amendments have been anticipated, but the ability
to commute a market linked pension is an unexpected surprise that
will be useful to many people who are otherwise locked in to excess
transfer balance positions with these old pensions.
Cooper Grace Ward is a leading Australian law firm based in
This publication is for information only and is not legal
advice. You should obtain advice that is specific to your
circumstances and not rely on this publication as legal advice. If
there are any issues you would like us to advise you on arising
from this publication, please contact Cooper Grace Ward
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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