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Total superannuation balance

Total superannuation balance treatment of reversionary income streams

Section: 18.9

For total superannuation balance purposes, the value of a member's retirement phase income stream is the balance of their transfer balance account, adjusted for the current value of account based income streams.

Non-account based reversionary income streams

Where a pension other than an account based income stream (eg a lifetime annuity) reverts to a reversionary beneficiary, the value won't be counted towards the reversionary beneficiary's total superannuation balance until the income stream is credited to their transfer balance account (eg 12 months after death).

Account based reversionary income streams

Where an account based income stream reverts to a reversionary beneficiary, the total superannuation balance rules require the current value of any account based income streams to be included regardless of whether there has been a credit for that income stream in the member's transfer balance account. Therefore, the current value of the reversionary income stream counts towards the beneficiary's total superannuation balance from the first relevant calculation time after death - which is the next 30 June.

While a reversionary account based pension recipient has 12 months from the date of death to sort out their transfer balance cap situation, the pension balance starts to count towards their total superannuation balance effectively from the next 30 June following the date of death.

Reversionary account based pension recipients may need to take action before/consider the impact of the reversionary income stream from 30 June following the date of death.

Example:

Mark and Sophie each commenced $900,000 account based pensions on 1 August 2018 and nominated each other as a reversionary beneficiary. Mark dies on 1 December 2019 (at which time his account based pension balance is $950,000) and his pension reverts automatically to Sophie.

Mark's pension starts to count towards Sophie's total superannuation balance from the first relevant calculation time after death - which is 30 June 2020, even though Sophie's transfer balance account will not be credited with the value at the date of death ($950,000) until 1 December 2020.

Assuming that at 30 June 2020, Sophie's own pension balance is $950,000 and the reversionary pension balance is $970,000 (and Sophie has no other superannuation interests), Sophie's total superannuation balance at 30 June 2020 is $1.92 million. This may impact her eligibility for other superannuation features in the 2020-21 financial year

Last modified: Wednesday, July 24, 2019