Critical steps flagged with pension commutations

Critical steps flagged with pension commutations

An industry consultant has highlighted some critical aspects to framing the scope of advice correctly when advising clients to commute amounts above the pension minimum.

Speaking in a webinar, Licensing for Accountants chief executive Kath Bowler said the way practitioners frame advice to clients around commuting pension payments above the pension minimum is very important.

If clients are planning to take more than the pension minimum and want to commute amounts, Ms Bowler said the practitioner has the option to either frame it for a specific year or they can frame it that every time they want to take a lump sum it comes from the super fund.

“If the client is looking to take lump sums from their super fund, then make the scope broad enough that it can apply past one year,” she suggested.

“Each year you can rely on the initial statement of advice provided that the objectives haven’t changed and the client circumstances haven’t changed materially.”

Ms Bowler explained that SMSF practitioners will still need to complete a record of advice each year, however, that refers back to the initial advice.

“It could just be an email or a short letter, it doesn’t even have to be an email technically, but we encourage everyone to do it in writing but it could just be a file note,” she said.

“It comes back to how you frame that initial scope so that it can cover you for future years.”

 

Critical steps flagged with pension commutations
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