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Advisers prioritise legacy pensions

SMSF legacy pensions

Addressing problems arising from legacy pensions has been identified as an area advisers will be treating as a major priority in 2022.

Practitioner queries fielded by an industry technical services team indicate advisers are looking to address the issues of legacy pensions for their SMSF trustee clients as one of their top five priorities for the year ahead.

According to BT Financial Group advisers are making preparations to wind-up any legacy pensions, such as life-time pensions and market-linked pensions, even though the measures allowing these actions announced in the 2021 budget have yet to be passed into legislation.

The measures are expected to come into effect on 1 July 2022 and the draft regulations for the initiative were released in December for industry consultation.

The BT technical services team noted the change will allow SMSF trustees to exit these legacy pensions that, in some circumstances, are the only reason they are continuing to run their own super fund.

The practitioner inquiries have also shown contributions to be an area focus for advisers in 2022 with two specific aspects attracting particular interest, the first of these being the changes to the work test rule.

“This is not surprising, since it was confirmed the bring forward opportunity would indeed be available for 66 and 67-year-olds for the last financial year, just before 30 June 2021, with the passage of the Treasury Laws Amendment (More Flexible Superannuation) Act 2021,” BT Financial Group head of financial literacy and advocacy Bryan Ashenden said.

However, he pointed out advisers are also already turning their attention to the further relaxing of these rules for people up to the age of 75.

Advisers are also looking to clarify the application of the downsizer contributions for 2022 in the wake of the budget announcement that the requisite age for this measure will be reduced from 65 to 60.

“One of the most asked questions is: could a client who is 59 sell their home and contribute some proceeds to super if they then turn 60? The answer to this will be yes, provided you have turned 60 within 90 days of receiving the proceeds and make the contribution within that 90-day period and after your 60th birthday and after 1 July 2022,” Ashenden said.

Further practitioners have indicated they will be concentrating on passing the Financial Adviser Standards and Ethics Authority (FASEA) exam and keeping abreast of any changes to Standard 3 of the FASEA code of ethics covering conflicts of interest.

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