Key Documents
The government is consulting on legislative amendments to the transfer balance credit provisions for individuals with a capped defined benefit income stream to ensure members are not adversely impacted by a successor fund transfer between superannuation funds.
Current legislation
Under current legislation, a member’s transfer balance may be unintentionally impacted due to the original income stream being treated as ceasing and a new one beginning.
This means a new valuation of the capped defined benefit income stream is required which can result in a higher value for transfer balance purposes and lead to adverse outcomes for some members.
Draft legislation
The draft legislation would amend the transfer balance credit provisions so that the credit and debit arising due to a successor fund transfer for individuals with a capped defined benefit income stream are equal.
This would ensure the amounts cancel each other out and the member’s transfer balance account is not impacted by the successor fund transfer.
Amendment application
The amendments would apply retrospectively to transfer balance credits that arose in relation to successor fund transfers that occurred on or after 1 July 2017.
The amendments do not apply retrospectively in certain circumstances where members could be made worse off. This includes some holders of life expectancy and market‑linked pensions.
The government welcomes feedback from interested parties on the draft legislation and explanatory statement.