A technical expert has underscored the need for financial advisers to be abreast of exempt current pension income (ECPI) and segregation rules, traditionally the domain of accountants and actuaries, since the superannuation reforms came into effect from 1 July 2017.
Accurium head of technical services Melanie Dunn told delegates at the SMSF Association National Conference 2019 last week that while traditionally ECPI was the realm of accountants who calculated it at the end of the year as part of the annual return, that is no longer the case.
“We want to highlight the importance of everyone understanding the ECPI, in particular advisers whose actions can have a big impact on the annual returns,” Dunn said at the conference in Melbourne.
“Advisers play such an important role in making those decisions throughout the year that will impact how the fund administration is completed and the tax outcomes at year end.”
Hewison Private Wealth private client adviser Chris Morcom admitted he had not given ECPI much thought as he believed it was the role of actuaries to oversee calculations and percentages.
“I particularly didn’t think about the impact on administration post 1 July 2017,” Morcom said.
However, advisers in his business now often discuss these issues, including putting in place processes to ensure all bases are covered for the client.
To this end, Morcom revealed if a client is commencing a pension, advisers in his firm will now ensure they have examined issues around disregarded small fund assets and other events that may occur throughout the financial year, including whether they need to leave a small amount in the accumulation phase of their SMSF.
“Having those checklists in place really helps us avoid making those unintended mistakes,” he said.
“I think the other thing we need to do around this is to have dates attributed to events coming along. We know when clients are turning 65 we need to be looking at their strategies and actively planning ahead.”