“Cleaning up” old pensions and reserves in SMSFs
Published Date: 17 Feb 2025
Treasury has provided an opportunity for SMSFs to clean up legacy pensions, as well as a general (sector-wide) opportunity for superannuation funds to more efficiently allocate existing reserve balances to members. Both opportunities are welcome news for the sector, particularly SMSFs that have defined benefit pensions that were commenced at least 18 years ago and don’t intersect well with the legislative changes in 2017 that introduced a raft of pension changes. The legacy pension commutation opportunity will provide SMSFs a five-year window to reorganise their balance sheets and potentially position themselves for a broader range of decision-making opportunities which could include winding-up the fund in a straightforward process. The relaxation of the rules for reserve allocation is also an opportunity to restructure balance sheets and has the potential to make the payment of death benefits more streamlined and tax effective. This opportunity does not have an end date so will provide for orderly and systematic management of reserves.
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- Published By: Kym Bailey
- Published On:17 Feb 2025
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