Total superannuation balance
Accumulation phase value
Accumulation phase interests include any superannuation interests that are not in retirement phase.
Accumulation phase interests include:
- accumulation accounts
- deferred income streams that have not yet become payable and where the recipient has not satisfied the retirement, reaching age 65, terminal medical condition or permanent incapacity condition of release.
- transition to retirement income streams where the recipient has not satisfied the retirement, reaching age 65, terminal medical condition or permanent incapacity condition of release.
- non-commutable allocated pensions or annuities where the recipient has not satisfied the retirement, reaching age 65, terminal medical condition or permanent incapacity condition of release.
- accruing defined benefit interests with a withdrawal value (see further details below).
The value of an accumulation phase interest (ie, the accumulation phase value) is:
- if the regulations specify a way of valuing the interest, that value, or
- the amount of superannuation benefits that would become payable if the client voluntarily ceased the interest at that time.
For accumulation accounts and account based income streams not in retirement phase (eg, transition to retirement income streams), the value will generally be the account balance at the date of measurement.
For accruing defined benefit interests, where a withdrawal value (lump sum equivalent) can be calculated it is included in the accumulation phase value. However, there is uncertainty as to whether these amounts are included in a client's total superannuation balance where there is no lump sum equivalent.
|Example: accumulation phase value
Vince wants to determine his total superannuation balance on 30 June 2017. He has not met a full condition of release. He has two superannuation interests:
As the transition to retirement pension is not a retirement phase income stream, the account balance at 30 June 2017 will be included in Vince's accumulation phase value.
The value of Vince's accumulation phase value at 30 June 2017 is:
$400,000 + $300,000 = $700,000
Vince's 'total superannuation balance' is the sum of:
Therefore the value of Vince's total superannuation balance at 30 June 2017 is $700,000.
Reserves - accumulation phase value
Where a fund, such as an SMSF, maintains reserves, the amount held in those reserves will not be included in the value of a member's total super balance under the existing rules. This is because amounts held in a reserve do not form part of a member's interest in a fund.
However, at this stage it is unclear what compliance approach the ATO may take to fund's establishing reserves for the primary purpose of reducing the amount that is assessed against the members' total superannuation balance.
Advisers may therefore wish to exercise caution before recommending any SMSF clients implement reserving strategies for this purpose.
SMSFs - availability of the accumulation phase value
Where a client is a member of a SMSF, they may not know the value of their accumulation or retirement phase income streams until several months after the end of the financial year when the fund's annual return is completed.
In this case, clients may have to delay making contributions until it is confirmed that the client's total superannuation balance is below the required threshold.
As the valuation of assets is important when determining total superannuation balance, trustees should follow the ATO valuation guidelines for self managed superannuation funds available at:
Last modified: Wednesday, August 23, 2017