This is a new service – your feedback will help us to improve it.

  • 96 Online
  • 9186 Members
  • 14615 Posts

Re: Rollover of lifetime complying pension

Reply

Initiate

Views 170

Replies 7

Is it possible to rollover a LCP to another fund, I have not heard of it before but if so, could it also include the member reserve?

My understanding was that the only way to rollover is to commute the CP and start a MLP which can be rolled over to another provider that allows for MLP's? Please correct me if I'm wrong. I am not sure how a RBS would account for a MLP, maybe the institution it's being rolled into will have a form for the relevant details required?

The next step would be the treatment of the reserves (earnings over and above the requirements of the LCP).

The fund has about 100k in reserves. Does this need to be "contributed" back out of the reserve, to the members? If so, can the entire balance be:
- contributed in one go or do they fit within members concessional / non concessional caps?
- do the members need to meet a work test (under 75 but over 65) to be able to contribute the reserves back to the members?
1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

ATO Certified

Moderator

Replies 0

Hi @naismith01 & @SX,

 

Thanks for your patience while we checked this out with our technical experts.

 

The complying pension would need to be commuted back to accumulation phase before it was rolled over – it’s not possible to rollover an income stream from one fund to another. Once the member’s interest has been rolled over, they would need to start a new income stream in the new fund.

 

There are restrictions on when a complying pension can be commuted to purchase another income stream. Generally speaking, complying pensions which commenced before1 July 2007 can only be commuted to purchase another complying pension if the commutation took place on or after 20 September 2007.

 

Regarding the amounts in reserve, if these amounts are to be rolled over with the commutation to the new super fund, they would need to be allocated to member’s super interest in the original super fund.

 

While they’re not ‘contributed’ as such (they’re allocated instead), they do need to be reported in ‘Member information and Supplementary member information’ in the SMSF annual return as ‘Transfers from reserves' (either assessable or non-assessable). 

 

The reserves that are allocated to the member’s interest will count towards the member’s concessional and/or non-concessional cap.  You can find more information on transfers from reserves on our website.

 

This issue can be very involved. So if you're unsure, the best course of action is to apply in writing for advice. You can write to us at:

 

Australian Taxation Office
PO Box 3100
PENRITH NSW 2740

 

You can also fax your request to 1300 669 846.

 

This may also give you the opportunity to discuss this with the technical officer who'll be responding to your request.

 

Thanks, NicM.

7 REPLIES

Moderator

Replies 0

Hi @naismith01,

 

You've posed some great questions.

 

We're checking this out with our technical experts and we'll get back to you as soon as we can.

 

Thanks, NicM.

 

 

SX
Initiate

Replies 0

I think it need to be converted into Market Link Pension First together with the balance in the reserve A/c. 

then commute Pension A/c back to Accumulation A/c before Roll-out?

 

good question!

 

i have a very similar case on hand as well.

 

would you please let me know the answers once you know.

 

Thanks,

 

Simon Xie

kezhengxie@gmail.com

Best answer

ATO Certified

Moderator

Replies 0

Hi @naismith01 & @SX,

 

Thanks for your patience while we checked this out with our technical experts.

 

The complying pension would need to be commuted back to accumulation phase before it was rolled over – it’s not possible to rollover an income stream from one fund to another. Once the member’s interest has been rolled over, they would need to start a new income stream in the new fund.

 

There are restrictions on when a complying pension can be commuted to purchase another income stream. Generally speaking, complying pensions which commenced before1 July 2007 can only be commuted to purchase another complying pension if the commutation took place on or after 20 September 2007.

 

Regarding the amounts in reserve, if these amounts are to be rolled over with the commutation to the new super fund, they would need to be allocated to member’s super interest in the original super fund.

 

While they’re not ‘contributed’ as such (they’re allocated instead), they do need to be reported in ‘Member information and Supplementary member information’ in the SMSF annual return as ‘Transfers from reserves' (either assessable or non-assessable). 

 

The reserves that are allocated to the member’s interest will count towards the member’s concessional and/or non-concessional cap.  You can find more information on transfers from reserves on our website.

 

This issue can be very involved. So if you're unsure, the best course of action is to apply in writing for advice. You can write to us at:

 

Australian Taxation Office
PO Box 3100
PENRITH NSW 2740

 

You can also fax your request to 1300 669 846.

 

This may also give you the opportunity to discuss this with the technical officer who'll be responding to your request.

 

Thanks, NicM.

SX
Initiate

Replies 1


@NicM

@naismith01

 

Hi,

I guess the issue is the 100K Balances in the Reserve A/c now.

as any amont more than 5% of members balances allocated will be counted toward concesional contribution CAP ==> means only very limted amount can be allocate to that member within one year (e.g. 25K).

or when we commute the CP and convert into MLP we can convert all reserve balance into MLP?

 

Thanks,

Simon Xie

kezhengxie@gmail.com

Moderator

Replies 0

Hi @SX,

 

Thanks for posting.

 

As we can only provide general information here on Community, we'd encourage you to write in for interpretive advice in regards to your situation.

 

Thanks, NicM.

Highlighted

MVF
Devotee

Replies 1

@naismith01  @SX 

 

Unfortuantely the ATO response does not answer one of your main questions ...  " My understanding was that the only way to rollover is to commute the CP and start a MLP which can be rolled over to another provider that allows for MLP's?

  

The answer is in an ATO interpritive decision  ATO ID 2015/22   ... and here is just one part from that ID that goes towards answering your questions - 

 

Subparagraph 1.06(2)(e)(iii) of the SIS Regulations provides that a complying lifetime pension may be commuted if the superannuation lump sum resulting from the commutation is transferred directly for the purpose of purchasing another income stream of a type specified in that subparagraph. A market linked pension is one of those specified types of income stream, but an account-based pension is not.

  

More detailed information on " Reserves " is published by CCH here .  Please note the ATO keeps removing part of the link provided so it does not work.  You will have to just google ..  The use of reserves - CCH iKnow

 

@naismith01  I hope this additional information answers your questions. 

 

@SX  The ID and CCH publication may assist with your questions as well ... 

 

 

Community Manager

Replies 0

Hi @MVF,

 

Thanks for the link.

 

However, as we've advised, we can only provide general information here on Community - advice from our technical experts is that there may be a number of factors to consider, depending on the situation. We'd encourage @naismith01 to write in for interpretive advice if they require additional information.

Thanks, @AmandaE
Community Moderator.

Top Solution Authors