Verdict reached on future of actuarial certificates
After a controversial proposal late last year which proposed massive changes to the requirements for obtaining an actuarial certificate, Treasury has released finalised regulations that appear to put the matter to rest.
In December last year, Treasury issued draft regulations for consultation, which included a proposal to provide an exemption from the requirement to obtain an actuarial certificate in applying the proportionate method to calculating the exempt current pension income (ECPI) deduction when a fund has both pension and accumulation interests.
The finalised regulations were tabled late Monday, and they do not include any reference to the previously proposed exemption that was outlined in the draft regulations. You can view the full document here.
Therefore, it’s fair to assume the current requirement to obtain an actuarial certificate in applying the proportionate method to calculating the ECPI deduction when a fund has both pension and accumulation interests will remain.
Once regulations are tabled in Parliament, it is “very uncommon” for them to be disallowed, the SMSF Association’s Jordan George said.
“These will be the regulations that people need to abide by,” Mr George told SMSF Adviser.
“It would be very unusual if they were disallowed, so we would expect that these would be final now.”
SMSF Adviser understands that there was lobbying behind the scenes from Tasmanian senators and financial services institutions during the consultation period, with submissions and views that were not made public.
Publicly, representative bodies such the SMSFA and the Actuaries Institute, lobbied in defence of actuarial certificates, with central arguments including that there would not actually be a cost saving for trustees if certificates were scrapped.
“Increased regulatory costs for the ATO may arise as they seek to scrutinise [the] SMSF trustee’s ECPI deduction calculations,” the SMSFA said in its submission to the government.
“In turn, this could lead to an increase in the SMSF levy to fund the ATO’s regulatory activities which would result in the cost being transferred back to SMSFs.”
The final regulations have been well-received by key parties in the actuarial certificate industry, including Andy O’Meagher, director at Act2 Solutions.
Mr O’Meagher told SMSF Adviser he believes that the responses to Treasury were “almost unanimous” in support for maintaining actuarial oversight.
Chief executive of Accurium, Tracy Williams, also referenced the significant amount of industry support for retaining the status quo.
“We are pleased the government recognises the value provided by actuarial certificate providers to SMSF trustees, and also their contribution to the integrity and efficiency of the system,” Ms Williams told SMSF Adviser.