SMSFs may now be the only superannuation structure to accommodate pension commutation notifications required to be lodged by 30 June under Practical Compliance Guideline (PCG) 2017/5 for members to adhere to the new transfer balance cap, according to a retirement savings technical expert.
“For self-managed super funds, this is a little easier [because] you just have the request from the member and the minute by the trustees accepting that request to say I want to roll back my excess, if I have an excess,” SMSF Association head of technical Peter Hogan said at the launch of the “RaboDirect Financial Health Barometer 2017 Super & Retirement Report” in Sydney recently.
“That’s all you need to do before 30 June, as long as that’s in place, and the ATO has spelt out what it wants to see in the minute in terms of content.
“All the calculations and so on, and perhaps identification of assets, happens after 30 June for self-managed super funds, so it’s not so bad.”
Hogan pointed out the process was more complicated with Australian Prudential Regulation Authority-regulated funds making the lead time involved significantly longer, meaning any commutation requests submitted now might be too late.
“If you’re talking about retail funds, industry funds or wrap accounts, those different types of superannuation offerings in the marketplace, you may already be a little bit too late to actually do anything,” he warned.
“That’s because you really do have to instruct [the trustees] to actually move money out of pension phase back into accumulation phase before 30 June.”
He said on average individuals belonged to more than one superannuation fund, which made the process more difficult as all structures from which a member was drawing a pension needed to be considered during the process.
