Need to know

Regulations have been made to enable any excess transfer balance amount to be commuted from certain complying income streams.

The changes do not address plans to allow for the commutation of legacy pensions. 

The regulations address issues arising from situations where a capped defined benefit income (CDBIS) stream such as a TAP commenced prior to 1 July 2017 are subsequently rolled into a new TAP which are not treated as a CDBIS. 

A CDBIS such as a TAP started pre 1 July 2017 cannot create an excess transfer balance cap however, if rolled out into a new TAP post 30 June 2017 the new income stream would not be treated as a CDBIS meaning there may be excess transfer balance cap issues.

The changes allow any resulting excess transfer balance amount to be commuted to rectify the excess.

Advisors should consider whether:

• the amount be retained in super and invested according to current investment strategy?
• the amount be withdrawn and invested outside of super or used to pay off debts?
• specific assets need to be sold to reduce balance?

Regulations have been made that give effect to the extension of the temporary reduction in minimum drawdown rates for super pensions for 2022/23, as announced by the Government in the 2022 Federal Budget.

Advisers should check with super funds whether:

• a client who has previously nominated to receive the legislated minimum will automatically have their 2022/23 annual payment calculated at the reduced amount
• new instructions will be required for 2022/23 where a client has previously requested to vary their minimum to the temporary reduced rate for the current financial year.

The ATO has released several important superannuation rates and thresholds for the 2022/2023 financial year.

One important change includes the increase in super guarantee from 10% to 10.5% from 1 July 2022.

It may be necessary to update superannuation recommendations for the new financial year in the context of these rate thresholds and other changes from 1 July 2022.

In addition, it may be necessary to update affected assumptions in any financial modelling tools.