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Jean Rey

Nov 11, 2020

Changing member pension policy

in SMSF Technical Forum

I have a question regarding what items should we be cautious for the audit of a fund where the members want to change their pension policies from non-revisionary to revisionary (in the case of one of their deaths, the other can gain their pension).

Can it be done "mid stream" by way of declaration?

Do they need to start a new pension?

Thank you in advance.

2 answers1 reply

Comments (3)

Reggie Tabangay

Feb 04, 2021

Whether a pension account is reversionary or not is established at commencement. Available literature on the matter say that changing whether it is reversionary or not via a declaration does work. An option would be to cease then restart the pension account as a reversionary pension.

THE AUDITORS INSTITUTE

Feb 10, 2021

Replying to

I agree with the above comments. There is the ability to change from a non reversionary pension to a reversionary pension during the pension. To get this done correctly getting the paperwork done correctly is essential. As an example Topdocs & other legal providers do offer a deed to amend the type of pension (re the pension reversion nomination). Normally as raised above the trust deed would need to be reviewed and a varied trust deed may be needed to allow the pension to be amended. There is also the ability to stop the pension and start a new pension. This needs to be done carefully as there would be a transfer balance account event that would need to be reported. If a pension is to be changed or restarted professional advice should be obtained by the Trustees of the Fund.

Thanks

SMSF AAA