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I am busy with a 2022 audit. The member, over the age of 65, drew up documents to commence an account based pension (ABP) at the start of the financial year however the latest executed deed is dated 12 December 2005 that only made provision for an allocated pension. Further, in the belief that the member was drawing an ABP, he also applied the 50% reduction to the amount drawn. This is now a double error. A new deed was executed in the 2023 FY which does not make provision for back dating the ABP. As the 50% reduction applies to ABP, does it mean that the drawings are neither an allocated pension nor an ABP and does he lose the ECPI?
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Hi Ron
Normally most "old" trust deeds do refer to "allocated pensions" rather than "account-based pensions". Often the deeds are worded broadly and may say along the lines of that benefits can be paid "in anyway that the legislation allows".
I had a review of a Fund's trust deed dated 1998 that was updated with a deed of variation this month and note the below paragraphs that arguably gives the Trustees the ability to pay an account-based pension.
My approach would be to see if the deed in place dated 2005 allowed for the account-based pension to be paid starting 1 July 2021. It would be appropriate to get legal advice if it is not clear.
If other forum members have a view on this query please let us know.
Thanks
SMSF AAA
Trustees generally have the powers to include: