The Government has released final regulations supporting its superannuation reform package which have confirmed that there will be no changes to the requirement for actuarial certificates.
In December 2016 draft regulations were released for consultation that included a provision that exempted superannuation funds whose only income stream liabilities were account based pensions from requiring an actuarial certificate. Under this proposal, for funds using the proportionate method to claim exempt current pension income (ECPI) the tax exempt percentage calculation would still need to be carried out, but it would no longer have required certification by an actuary.
There was a significant response to the consultation with the SMSF industry overwhelmingly in support of retaining the need for actuarial oversight. Submissions from the SMSF Association, SISFA, Chartered Accountants ANZ and the Actuaries Institute all raised concerns about proposed changes and highlighted that the current system is working well.
We would also like to thank the many clients of ours who have shown their support for the work that we do.
The final regulations, Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulations 2017, were registered on 27 February 2017 and do not include the exemptions for the need for actuarial certification. Treasury has since confirmed that it will not be taking the proposed changes forward. We are pleased the Government recognises the value provided by actuarial certificate providers to SMSF trustees and also their contribution to the integrity and efficiency of the system.
SMSFs with unsegregated pension and accumulation assets will continue to need an actuarial certificate to claim ECPI. The good news is that this is one less thing SMSF practitioners need to worry about with all the other changes they have to contend with at the moment. Accurium’s Technical Services team will continue to help our clients understand and navigate the reforms.
Our upcoming webinar on the superannuation reforms on 4 April is now fully booked with 1,000 clients registered. However, a recording will be available in our Technical Hub for those who missed out.
Defined benefit pension flexibility
Practitioners with clients who have defined benefit or market linked pensions may also have spotted provisions in the draft regulations that may have allowed them to be commuted to meet the $1.6 million cap. Due to concerns over how this might work in practice, these proposals have also been removed from the final regulations and will not be taken forward.
To understand how to comply with the $1.6 million cap for those with defined benefit pension see our flow charts here.