Getting Help

Subscriptions

Register for Training


 

Note

BGL do not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.

Overview


With reference to the ITAA 1997 - Section 294.130:

Meaning of capped defined benefit income stream

             (1)  A * superannuation income stream is a capped defined benefit income stream if it is:

                     (a)  covered by an item of the following table; and

                     (b)  if it is covered by any of items 2 to 7 of that table--it is in the retirement phase just before 1 July 2017.

 

Capped defined benefit income streams

Item

Topic

Type of Pension in SF 360

A superannuation income stream is covered if:

1

Lifetime pension

Complying

it is a pension for the purposes of the Superannuation Industry (Supervision) Act 1993 (the SIS Act ) that is provided underrules that meet the standards of subregulation 1.06(2) of the Superannuation Industry (Supervision) Regulations 1994 (the SIS Regulations )

2

Lifetime annuity

Complying

it is an annuity for the purposes of the SIS Act that is provided under a contract that meets the standards of subregulation 1.05(2) of the SIS Regulations

3

Life expectancy pension

Complying

it is a pension for the purposes of the SIS Act that is provided under rules that meet the standards of subregulation 1.06(7) of the SIS Regulations

4

Life expectancy annuity

Complying

it is an annuity for the purposes of the SIS Act that is provided under a contract that meets the standards of subregulation 1.05(9) of the SIS Regulations

5

Market linked pension

Allocated

it is a pension for the purposes of the SIS Act that is provided under rules that meet the standards of subregulation 1.06(8) of the SIS Regulations

6

Market linked annuity

Allocated

it is an annuity for the purposes of the SIS Act that is provided under a contract that meets the standards of subregulation 1.05(10) of the SIS Regulations

7

Market linked pension (RSA)

Allocated

it is a pension for the purposes of the Retirement Savings Accounts Act 1997 that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the Retirement Savings Accounts Regulations 1997


Market Linked Special Value Calculation

 


 

Special Value of Market Linked Pension to be calculated automatically by Simple Fund 360 if commenced prior to 1 July 2017. If commenced beyond 1 July 2017 Market Linked Pensions are treated in the same manner as Account Based Income Streams (not with a special value).

 

Example of Special Value calculation:

StepsCalculation

 

  1. Calculate Annual entitlement = First payment / Days in period * 365


  2. Calculate Special Value = Annual entitlement * number of years remaining (rounded up to the nearest full year)

Jason has a market linked pension just prior to 1 July 2017. The first benefit he is entitled to receive from his pension just after that time is his fortnightly payment of $3,110.40 due on 8 July 2017. The current account balance of the pension is $600,000 and remaining term in Jason's pension just before 1 July 2017 is 8.75 years.

  1. Jason's annual entitlement just before 1 July 2017 is calculated as:

    First payment / Days in period * 365 = 3,110.40 / 14 * 365 = $81,092.57

  2. The remaining term in Jason's pension account is rounded up from 8.75 years to 9 years when determining the pension's special value.

  3. The special value of Jason's pension just before 1 July 2017 is calculated as follows: $81,092.57 * 9 = $729,833.13

  4. Note that when calculating Jason's total super balance, his pension will be valued as $600,000.

A credit arises in Jason's transfer balance account on 1 July 2017 for $729,833.13. Simple Fund 360 will include the special value of the pension in the member's Transfer Balance Dashboard.

Complying Pension Special Value Calculation


Example:

StepsCalculation
  1. Calculate Annual entitlement = First payment / Days in period * 365

  2. Calculate Special Value = Annual entitlement * 16

Jane needs to work out the special value of her lifetime complying pension. The special value of her lifetime pension at 1 July 2017 is 16 times her annual entitlement for 2017–18.

The first fortnightly payment after 1 July 2017 is $6,000.

  1. Jane's annual entitlement is worked out as follows:
    $6,000 / 14 * 365 = $156,428.58

  2. The special value is then worked out by multiplying her annual entitlement by 16:
    $156,428.88 * 16 = $2,502,857.14

A credit will arise in Jane's Transfer Balance Account of $2,502,857.14. Simple Fund 360 will report the market value of the complying pension however if there is a difference in the market value and special value of the pension the transfer balance event will need to be edited manually to present the special value to appear on the TBAR.


How to edit an event's balance?

From the Transfer Balance Dashboard select the edit icon for the complying pension.


Adjust the Credit balance to reflect the Special Value.

Select the green tick to save the adjustment.