Actuarial and commutation rules dropped from superannuation regulations

New rules for actuarial certificates and commuting some kinds of superannuation pensions due to the Transfer Balance Cap have been dropped from the final version of the Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulations 2017.

The Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulations 2017 were registered on 27 March 2017, but without some of the proposed changes included in the draft regulations.

Treasury had released a draft version of the regulations for consultation. This draft included an exemption from being required to obtain an actuarial certificate for some funds, resulting from the changes in the Fair and Sustainable superannuation legislation.

The draft regulations would have provided “an exception to the requirement to obtain an actuary’s certificate in applying the earnings tax exemption in section 295-390 of the ITAA 1997 (the proportionate method),” says the draft Explanatory Statement.

The Actuaries Institute had argued against this change.

The draft regulations would also have expanded the exemptions on commutations, allowing pensions to be commuted as a result of exceeding the Transfer Balance Cap.

The draft regulations said: “The amendments included in Schedule 1 expand the existing exceptions to the restrictions on commutations to permit the commutation of certain superannuation income streams that are done for the purpose of reducing or avoiding an excess transfer balance.”

However both of these measures have been removed from the final version of the regulations which were made this week.

Treasury and the office of Minister Kelly O’Dwyer have been contacted for comment on why these provisions were not included in the final regulations.

The Treasury website does not, yet, contain the submissions made in response to the draft regulations. The closing date for submissions was 10 February 2017.

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2 Replies to “Actuarial and commutation rules dropped from superannuation regulations”

  1. Thank you for this timely update. I am interested as well , just by way of information to understand and explain, what changed the Treasury’s mind on ability to commute complying pensions and TAPs?

    I could see complying annuities, be it in SMSF’s or retail, arguably problematic with commuting but didn’t think it would have been onerous for TAPs to be able to be commuted.

    1. The Treasury said they would get back to me with a response, but I haven’t received it yet.

      It seems that the actuarial certificate change followed from lobbying efforts by industry bodies, and Tasmanian Senators, according to reports. But it’s unclear at this stage if this also motivated dropping the proposed commutation changes.

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