Funds also must now consider the transition of their non-retirement to retirement income stream to meet compliance obligations.
Mr Ellem, head of education for Accurium, said on the FirstTech podcast for Colonial First State that the new rules also must now include information about when standard TRIS converts to or moves into the retirement phase due to either the member satisfying a full condition of release and notifying the trustee; the retirement condition of release or turning 65; or if a member’s pension reverts upon their death.
“While the pension is not regarded as ceasing because it’s reverting, it is a new retirement phase pension for transfer balance account purposes,” Mr Ellem said.
“It’s a new death benefit pension, which as we know has to be in retirement phase for the reversionary beneficiary – the recipient.”
Mr Ellem said this also needs to be reported by 28 days after the end of the quarter that the TTR converted.
“So if you turn 65 today, then you’ve got to report by that by the 28 October now,” he said.
Death benefit reverting is a little more complex, he said, especially in regard to when credit will arise.
“The credit will arise in 12 months’ time, so on the 12-month anniversary of the pension reverting the death of the member, but the fund still needs to report the reversion by 28 days after the end of the quarter in which the pension reverted because that is the transfer balance account event that is required to be reported.
“It’s a new retirement phase pension for the reversionary beneficiary and it commenced when it reverted, but the credit won’t arise in the individual’s transfer balance account – the reversionary beneficiaries transfer balance account – until the 12-month anniversary.”
Mr Ellem said the date of the transfer balance account event is the date the pension reverted or the date of death of the original pension recipient.
He said there is a box that can be ticked in both the paper and electronic versions of the transfer balance account report to state that the retirement phase pension commenced as a consequence of a pension reverting to them on the death of the other member – the original pension recipient.
“That means the credit will not arise in the reversionary beneficiaries transfer balance account until 12 months after the date of the transfer balance account event,” he said.
“What you really don’t want is the transfer balance account event, for example, the member dying and the pension reverting on the last day of the quarter, as then you only have 28 days to determine market value of the pension on the date of death and report it to the ATO,” he said.
“But while you may not have control over the timing of the TBA event, as an accountant administrator responsible for this, you should have control over your systems and processes that you have in place to deal with this type of scenario.
“I advise that you review your systems and in particular, their capability of dealing with reporting TBA events quickly.”
