SMSF members who commence the immediate exit of a legacy pension will not be stopped from doing so even if the regulations that allow that move are rejected by parliament.
Accurium principal Melanie Dunn said the regulations that allow the commutation of legacy pensions commenced in early December and are law that will apply unless parliament votes to disallow the changes.
“The new regulations are a game changer. Practitioners working with SMSFs should review their funds for any which have a defined benefit pension or market-linked pension or which has unallocated reserves from a ceased defined benefit pension,” Dunn stated in a blog post on the Accurium website.
“These regulations provide members and their families with much greater flexibility to manage or wind up their SMSF, reduce administrative costs of the fund as legacy pensions can be time consuming to administer and enable the payment of death benefits as part of estate planning strategies.
“Best of all, the regulations are law from 7 December 2024.”
She pointed out a disallowance period of 15 sitting days of parliament applied to the regulations during which time the changes could be voted down.
This period did not change the operation of the regulations and would end, at the earliest, by 14 April for the House of Representatives and 13 May for the Senate. It would be extended if an election were called in the meantime.
“As such there is a possibility the regulations could cease in the event of a successful notice of motion to disallow during the period. We expect it unlikely that a motion to disallow will occur, however, if a successful motion did occur, the law would cease to apply only from that time and not retrospectively,” Dunn said.
“You can act now with confidence the regulations are law, even though they could potentially become disallowed at a future date.”
https://smsmagazine.com.au/news/2024/12/09/legacy-pension-exit-changes-approved/
