Pension documents and some common pitfalls

According to a superannuation industry lawyer at Cooper Grace Ward, not enough attention is given to terms and conditions in pension documentation to achieve a desired outcome.  It is vital for Self-Managed Super Fund (SMSF) trustees to have current documentation with clear guidelines that complies with legislation.

For SMSF trustees receiving a transition to retirement income stream (TRIS), needless constraints may be applied if the trust deed does not contain important clauses, such as conditions of release.  A TRIS pension is subject to requirements and when a member reaches a condition of release*, it can then become a normal account-based pension if covered by pension documentation.   If documents do not permit restrictions to be removed upon a member meeting a condition of release, the pension may have to cease and start again, or the trust deed amended to include conditions of release.

Reversionary pensions, which is a pension paid to a nominated beneficiary after a SMSF member’s death, is another area inadequately covered in a lot of trust deeds.  To nominate a reversionary beneficiary, it must be outlined in the SMSF trust deed.

Another common problem is pension documents without signatures.  The Superannuation Industry (Supervision) Act 1993 (SISA) includes a requirement that certain documents must be signed by the trustees.  Such a small omission may result in a compliance breach with heavy penalties.  It is the responsibility of the trustees of a SMSF to ensure that documentation is legally compliant, and this includes signatures.

* includes reaching age 65, retires, permanent incapacity, terminal medical condition

Source: 

Brownlee, M 2018, ‘Lawyer pinpoints common flaw in TRIS pension documents’. SMSF Adviser, 24 January, accessed 30 January 2018, https://www.smsfadviser.com/news/16242-lawyer-pinpoints-common-flaw-in-tris-pension-documents?utm_source=SMSFAdviser&utm_campaign=25_01_18&utm_medium=email&utm_content=1

Lodgement Date Extended for 2016-17 SMSF Annual Returns

The Australian Taxation Office (ATO) has extended the lodgement date for Self-Managed Superannuation Fund (SMSF) annual tax return to 30 June 2018.

Major changes were introduced on 1 July 2017 and to reduce some of the strain on professionals and their SMSF clients, the ATO decided to extend the due date for 2016-17 returns.

With 30 June 2018 falling on a Saturday, the tax laws allow lodgement of 2016-17 SMSF annual returns on the next business day, Monday 2 July, without penalty.

For further information, click here.