Legacy pension service
Helping you take advantage of the 5-year legacy pension exit measure & reserve allocation rule changes
FREE WEBINAR
Simplifying legacy pension & reserve exits
20 Mar 2025 2:00PM – 3:15PM AEDT
Delivered in conjunction with Class
FREE WEBINAR
Exiting legacy pensions and reserves
8 Apr 2025 2:00PM – 3:15PM AEDT
Delivered in conjunction with SuperMate
New regulations effective from 7 December 2024 introduce the long-awaited 5-year exit measure, allowing SMSF members with specific legacy pensions to fully commute their pension. This applies to:
- Lifetime complying pensions (SIS Regulation 1.06(2))
- Life expectancy pensions (SIS Regulation 1.06(7))
- Market-linked pensions (SIS Regulation 1.06(8))
Pensions under SIS Regulation 1.06(6) (flexi pensions) are not included but may still be exited under existing laws and using the new reserve allocation rules.
Reserves resulting from legacy pension commutations can now be allocated to the original pensioner without impacting contribution caps. Other reserves, such as anti-detriment, insurance, and investment fluctuation reserves, may also be allocated more efficiently.
Accurium are market leading defined benefit actuarial certificate providers and consultants, and with over 25 years’ experience, our team are experts in the complexities for how to deal with legacy pensions and reserves in an SMSF.
Read more about the new rules in our latest blog: Santa delivers for legacy pension recipients
Contact us
Contact us to obtain a quote or find out more about how we can help.
Melanie Dunn, Actuary and Principal of Accurium, and Mark Ellem, Head of SMSF Education, are leading our team’s response to the new Regulations with a service to assist you take advantage of this opportunity with your clients. Both Mel and Mark were involved with the SMSF Association’s working group discussions with Treasury on the draft regulations and have valuable insights into these new measures.
This is an exciting and welcome rule change for members of SMSFs in receipt of legacy pensions, or who have reserves in their Fund.
Legacy pension restructure packages
Accurium offers specialist services from our actuarial and SMSF expert team to help professionals and their SMSF clients understand and navigate these changes.
Legacy pension restructure package
From $3,000+GST
This package is relevant for Funds with market-linked or/and defined benefit pensions and includes:
A comprehensive report setting out the implications of doing nothing and retaining the legacy pension vs the options to commute the pension including transfer balance cap, tax on death and income, and pension payment implications.
Documents and minutes to enact the commutation of the legacy pension and commencement of a new ABP (if desired).
Allocation of reserve package
From $2,500+GST
This package is relevant for Funds with an unallocated reserve in the Fund and includes:
A report setting out the entitlement for and options for, and options for, allocating the pension reserves including consideration of cap-free pension reserve allocations, 5% rule and NCC cap allocations.
Documents and minutes to enact the allocation of reserves to members.
Allocation of defined benefit pension reserve package
From $2,100+GST
This package is relevant for Funds with multiple defined benefit pensions and includes:
A report setting out a brief description of the new Regulations and the fair and reasonable allocation of reserves between pensions including transfer balance account considerations.
Documents and minutes to enact the commutation of the legacy pension and commencement of a new ABP.
Documentation only package
From $1,000+GST
This package is relevant for Funds solely with market-linked pensions or a single defined benefit pension and includes:
Documents and minutes to enact the commutation of the legacy pension and commencement of a new ABP.
Please contact us for a no obligation discussion of your SMSF client’s scenario to understand they could benefit from utilising the new Regulations on 1800 203 123.
Case studies
Below we outline example case studies for client scenarios where the new Regulations provide an opportunity to improve client outcomes:
Case Study 1: Steve with a Lifetime Complying Pension
Steve, 79, receives a $95,000 annual pension. His pension reserve of $1.4 million cannot be passed to dependents upon death. Under the new rules, he can commute his pension, allocate the balance to his accumulation account, withdraw it, or start a new pension.
Case Study 2: Florence with a market-linked pension
Florence, 82, has an MLP in her SMSF with 8 years remaining. She wants to avoid tax implications for her children. The new exit measure allows her to commute her pension and withdraw her balance now and plan her estate accordingly.
Case Study 3: Allocating a reserve
Ben, Phoebe, and George are all members of the Hills Family Super Fund. They each have a total super balance at 30 June 2024 of less than $1 million.
Their late mother, Alice, was a member of the fund until her recent passing in October 2024. Alice’s only interest in the SMSF was a lifetime complying pension, and at the time of her passing, the pension reserve was worth $1,050,000. This amount was not available to be paid as a super death benefit and was retained in the SMSF as unallocated reserve benefits.
The new measures allow for the efficient allocation of these reserves to Alice’s children.
An amount of $350,000 can be allocated from the reserve to each of Ben, Phoebe, and George. These amounts will be counted against their non-concessional cap as they were allocated on or after 7 December 2024. As their respective TSB at 30 June 2024 was below $1.66 million, they can use the bring-forward arrangement for a maximum non-concessional cap of $360,000 each.
