The September quarter round-up from BT Advice Technical showed most adviser queries during the three-month period centred on the treatment of transition-to-retirement income streams (TRIS).
Two specific areas advisers are most concerned about are the impact on a TRIS for individuals who are 60 years of age or older and what the implications are for a TRIS with a reversionary nomination.
Between the two TRIS issues, individuals reaching retirement who have a TRIS is causing the greater amount of worry among advisers, especially situations where the person in question has more than one employment arrangement.
In short, BT Advice Technical has found most of the questions on this topic are seeking clarity in relation to the Australian Prudential Regulation Authority (APRA) guidance on the subject.
The regulator has stated if a person reaches the age of 60, has two employment arrangements and terminates one, a condition of release will have been satisfied.
“While nothing has specifically changed in this area from a legislative point of view, the APRA guidance paper certainly reinforces the rules around employment arrangements and conditions of release,” BT technical consultant Tim Howard said.
Howard pointed out APRA’s stance meant advisers had to take extra care if they have clients in this position.
“Given the recent changes to the tax treatment of the earning on assets supporting transition-to-retirement income streams, it is now even more important to consider whether a member can start a retirement-phase pension, such as an account-based pension (ABP), or convert their existing TRIS into an ABP,” he said.
In relation to the implications of a TRIS with a reversionary nomination, the satisfaction of a condition of release was also a key element to the confusion among the advisory community, according to Howard.
“Parts of the new super laws and supporting commentary from the ATO point to the reversionary beneficiary themselves needing to satisfy a condition of release at the time of the original member’s death,” he said.
“While this is creating a degree of uncertainty from an estate planning point of view, a number of industry participants are currently seeking further clarification on the issue.”