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Welcome End to Legacy Pensions

Recently, I have become increasingly concerned with the mess called “Legacy Pensions”. Since these products are all at least nearly 20 years out, the members tend to be in mid to late 80’s. You see: the need for capital for age care homes; large unallocated reserves; loss of capacity; inability to handle the complexities; and a host of other aspects pointing to the need to tide up this area. Finally, the government has acted!

LegacyPic

The Assistant Treasurer and Minister for Financial Services, Stephen Jones, has released a consultation draft of Treasury Laws Amendment (Self-Managed Superannuation Funds – legacy retirement product conversions and reserves) Regulation 2024. It allows legacy pension product exits with the capital used to commence an account-based income stream, left in an accumulation interest account or withdrawn from superannuation totally. The commutation must occur in full within a five-year grace period starting from the day the regulations commence.

These changes apply to legacy lifetime, life expectancy and market-linked income stream products. Some allocations will be exempt from both contribution caps, while some reserve allocations will count as non-concessional contributions. The definition of “pension liability purpose” is going to be important.

The consultation period ends on 8th October, 2024. I look forward to the end of these legacy pensions that no longer meet a fit for purpose definition.

While these legacy pensions will start to rapidly disappear, NetActuary undertakes to diligently undertake the actuarial requirements to the very end. We now has a sizeable number of them becuase our annual actuarial fee is only $231 inclusive of gst. We happy to undertake this work even if you use alternative ECPI percentage services. Simply send us the last actuarial report and draft (pre year end items) financial statements and we will help both with the actuarial requirements and conversion to ABP/Accumulation/Exit when that is possible.

NetActuary P/L ABN 94108585164
3/19a Hunter St, Hobart, Tas, 7000
PO Box 750, Sandy Bay, Tas, 7006
Email: Brian@NetActuary.com.au
Direct Telephone: (03) 9028 5002