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Through The Legislative Mist

A solution to non-commutable market-linked pensions exceeding the Transfer Balance Cap without the capacity to reduce to an appropriate balance is slowly emerging through the Legislative mist. The Mid-Year Economic and Fiscal Outlook 20220-21 had the following paragraph:

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“The Government is amending the law to ensure that retirees who have commuted and restarted certain market-linked pension, life expectancy pension and similar products are treated appropriately under the transfer balance cap.

The measure will enable retirees with these products who have been unable to commute amounts in excess of their transfer balance cap to undertake the necessary partial commutation. The measure also ensures appropriate tax outcomes for these retirees given their prior inability to comply with the transfer balance cap rules.

These amendments will take effect from the date the relevant bill receives Royal Assent.

This measure is expected to have no impact on receipts over the forward estimates period.”

When draft legislation is available, NetActuary will comment further on the tax efficiency, estate planning and increased retirement income opportunities. The opportunities will extend into other types of SMSF legacy pensions as these can first be converted to a market-linked pension.

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