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Capped defined benefit income streams

Capped defined benefit - Introduction

Section: 20.1

Capped defined benefit income streams are a special category of retirement phase income stream created from 1 July 2017 as part of superannuation reform. Capped defined benefit income streams have special valuation rules for transfer balance cap and total superannuation balance purposes as well as the taxation of pension/annuity payments.

Capped defined benefit income streams include:

Capped defined benefit income streams Must meet SIS regulation
Lifetime pensions commenced at any time 1.06(2)
Lifetime annuities commenced prior to 1 July 2017 1.05(2)
Life expectancy pensions and annuities commenced prior to 1 July 2017 1.06(7), 1.05(9)
Market-linked pensions and annuities commenced prior to 1 July 2017 1.06(8), 1.05 (10)
Any income streams set out in the regulations to be capped defined benefit income streams As set out in the regulations

From 1 July 2017, the only type of income stream that can be commenced that will meet the definition of capped defined benefit income stream is a non-commutable lifetime pension.9 Lifetime pensions are often provided to Commonwealth, State and Territory public office holders, and military and civilian employees. Most of these schemes are closed to new members.

Capped defined benefit income streams have modified rules for:

  • the transfer balance cap
  • total superannuation balance, and
  • the taxation of pension / annuity payments.

Last modified: Thursday, January 11, 2018