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Mid-tier flags post-reform contributions strategy

Mid-tier flags post-reform contributions strategy

33028 transform
Miranda Brownlee
09 March 2017 — 1 minute read

SMSF practitioners and trustees have been told that taking full advantage of non-concessional contributions before 30 June may enable them to commute certain legacy style pensions from their SMSF.

Speaking to SMSF Adviser, BDO national leader of superannuation Shirley Schaefer said SMSF trustees looking to commute their market-linked pensions may be able to utilise the bring-forward amount of $540,000 to bring their super fund balance above the $1.6 million.

“If they have a balance that is over $1.6 million and they’ve got a market-linked pension, they can then basically commute or get rid of that market-linked pension because they have more than the $1.6 million. The special rules allow you to get out of those market-linked pensions if it pushes you over $1.6 million,” Ms Schaefer explained.


Ms Schaefer noted the issue for many SMSF trustees that still have legacy pension products in their SMSFs is that, the superannuation rules have moved on and these older style products are no longer relevant.

“I know that the industry is still having conversations with the ATO and Treasury about trying to get some clarity or simplification around some of these things in terms of sorting out the regulations,” she said.

Ms Schaefer added there are a few potential ways where Treasury could help simplify how the super reforms interact with legacy pension products, particularly with how they are valued.

“Rather than have these fantastic calculations, [the government could] just have them count towards the transfer balance account, based on their account balance – so what is in the actual pension account –  particularly for a market-linked pension, which is only ever paid out based on the account anyway,” she said.

“The other thing is, of course, to just regulate the fact that you can unwind these old products and convert them into account in order to [allow] compliance with these new rules.”

Mid-tier flags post-reform contributions strategy
33028 transform
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