New pension rules raise adviser workload: SMSF Alliance

New pension rules combined with the Australian Taxation Office’s (ATO’s) revised treatment of some existing practices surrounding exempt current pension income (ECPI) has not increased the workload of actuaries, with the increased workload instead falling onto administrators and advisers, according to the SMSF Alliance.

David Busoli, principal and SMSF specialist mentor at the SMSF Alliance, said there are two methods of calculating ECPI:

1) Segregated – where all the fund was in retirement phase and an actuarial certificate was not required;

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2) Unsegregated – where only part of the fund was in retirement phase and an actuarial certificate was required.

“In addition, irrespective of either of these considerations, some funds cannot segregate for ECPI purposes while others must segregate,” Busoli said.

“A further complication is the date at which a transition to retirement income stream becomes a retirement phase income stream. This will be the earliest of age 65 or when notified that the member has triggered a condition of release.”

Busoli said that funds that cannot segregate for ECPI purposes were those containing a member that had a total super balance of at least $1.6 million at 30 June last year and a retirement phase pension in any fund at that time.

“If this is the case then, even if this member is not the SMSF pension member, the SMSF will require an actuarial certificate to determine its ECPI. Such funds are described as holding ‘disregarded small fund assets’,” he said.

Busoli asked: “What if the fund does not contain disregarded small fund assets so deemed segregation is to apply? This would necessitate an actuarial certificate which would restore the 50 per cent exempt position.”

He said these considerations placed more onus on advisers and accountants/administrators than they did on actuaries.

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