Dealing with legacy pensions in an SMSF – an uncommon common problem

$400.00 +GST

In stock

Presented By
Mark Ellem
Head of Education

The number of SMSFs with members being paid an old legacy pension continues to decline. However, this means that the frequency of these pensions coming to the end of their term is increasing. The end of a term can come about due to the death of the member, which can give rise to a number of technical, compliance and tax issues – many of which are easier to deal with before the pension ends, that is, before the member dies. 

Whilst you may only have one or two SMSFs in your client base with these pensions or even none at all, being aware of the consequences of the pension coming to an end, including when the member passes away, can help you provided valuable advice to an existing or potential client of their options. These options include a restructure of an existing legacy pensions to a new market linked pension and whether the SMSF can be wound up. 

This 2 ½ hour online workshop considers the options for an SMSF member with a legacy pension, that is, one of the following pensions: 

  1. Lifetime complying pension; 
  2. Life expectancy pension (also known as a fixed term pension); 
  3. Market linked pension (also known as a term allocated pension). 

The workshop considers the: 

  • superannuation compliance and taxation consequences when the pension ceases or the member dies; 
  • restructuring options available for each type of legacy pension; 
  • amount of capital from the original pension that can be used to commence a new pension; 
  • transfer balance cap consequences of restructuring a legacy pension; 
  • social security considerations of a restructuring a legacy pension; 
  • income tax consequences for the SMSF and member where a legacy pension is restructured; 
  • the options for dealing with an unallocated reserve in an SMSF. 

Another very important consideration that will be covered in this workshop, is the timing of the proposed two-year exit measure for certain legacy pensions that the Federal Government announced in their 2021 budget. Whilst no draft legislation has been released to date, many are expecting a start date of 1 July 2022 and consequently are simply putting aside these pensions to deal with when the exit measure commences. However, this alone can be fraught with danger as the exit measure may not start on 1 July 2022 and given the ages of member with these types of pensions, they themselves may not be around when the exit measure does actually start – which is no guarantee, particularly if there’s a change of government at the next election.  

In addition to covering the options available under the law as it currently exists, we will also take into consideration the proposed two-year exit measure and how we expect it may operate. We’ll also consider whether a legacy pension that has been restructured prior to the start of the two-year exit measure, could also be exited under the proposed measure.

The workshop will cover a number of practical case studies, a reference guide and checklists for you to refer to.



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