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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.

Action needed on legacy pensions

Various industry bodies, including the SMSF Association and the Tax Institute, have all raised the need for reform to help retirees trapped in legacy income streams in self-managed superannuation funds (SMSFs). The Actuaries Institute has now joined the chorus for change with its own submission to Treasury.