ATO, Pensions, Retirement

TRIS could hinder indexation access

TRIS TBC indexation

The situation of a person turning 65 in June 2023 with a TRIS needs particular attention so they can maximise their personal transfer balance cap.

A senior superannuation executive has warned practitioners to be wary of SMSF clients who have a transition-to-retirement income stream (TRIS) in place and are turning 65 in June in order to ensure these individuals will be allowed to gain the maximum benefit from the indexation of the general transfer balance cap (TBC) to be implemented on 1 July.

“[With these clients you need to] make sure that their TRIS doesn’t inadvertently convert to a retirement-phase pension before 1 July otherwise they will have a TBC of $1.7 million,” Institute of Financial Professionals Australia head of superannuation and financial services Natasha Panagis told attendees of her most recent quarterly update webinar.

“So if you’ve got clients in the situation, maybe think about commuting their TRIS and commencing a pension on or after 1 July so that they are able to access a higher [personal] transfer balance cap of $1.9 million.”

With reference to the indexation of the general transfer balance cap on 1 July, taking it from $1.7 million to $1.9 million, Panagis reminded advisers and accountants of what the ATO is ideally looking for by way of super fund reporting.

“What the ATO wants to see is [for advisers and trustees] to make sure the member’s personal transfer balance cap calculations are based on correct and up-to-date information and [so] it is encouraging all funds to report any [pension-related] events before 1 July 2023 prior to 30 June this year,” she noted.

“What [the regulator] is saying is if any pre-1 July [pension-related] events are reported after that date, then there might be some consequences for the member. If [pension-related events] are reported after that date, then the ATO will still look at whether a person is entitled to proportionate indexation [of their personal transfer balance cap] and it will apply it to their account in any case.

“But the key message here is to make sure that all [pension-related] events that occurred during this financial year are reported to the ATO as soon as possible.”

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