Legacy pension conversion – an escape route but watch for some traps!

A welcomed announcement out of this year’s budget was the proposed measure to allow those with certain legacy pensions to effectively cease them during a two-year period, which is expected to commence on 1 July 2022. Whilst the measure provides an escape route for those with these pensions which are generally non-commutable, there may be some traps along the way, as well as some being left behind. Let’s consider how this measure may be implemented and what traps could be encountered along the way.

ECPI draft legislation – a closer look

With the release of draft legislation by Treasury on 21 May 2021 for the previous Budget proposal to provide choice to superannuation trustees when determining the fund’s claim for exempt current pension income (ECPI) and to remove a redundant requirement to obtain an actuarial certificate when claiming ECPI for certain funds, it’s time to take a closer look at the implications of the proposed measures, both from a technical and practical application perspective.

Majority of SMSF practitioners against proposed ECPI changes

Changes to how exempt current pension income (ECPI) is determined announced in the 2019-20 Federal Budget are due to come into force from 1 July 2021. While draft legislation is yet to be released, the proposals suggest SMSF trustees will be given a choice over whether to use the proportionate method or segregated method when claiming ECPI for funds that are solely in retirement phase for a period in an income year.