Switching from super to pension account

When we receive a request to switch, we’ll review it within one to two business days. It will generally take up to 10 business days to complete the switch. The timeframe depends on the individual circumstances and existing holdings. If all information is provided and the account is ready for the switch to be processed, the request may be completed sooner.

Please note the following may impact the timing of switch requests:

• Outstanding transactions – we won’t be able to complete a switch request of the full balance until all outstanding transactions have settled
• SMA holdings –if the account holds an SMA, this will need to be switched separately and may take additional time to complete
• Account opening – if a new account needs to be established as part of the switch
• Pension update – if a pension update is required as part of the switch
• Monthly fees – if a switch request is submitted during the first week of the month, it will be completed after this has been finalised. Please allow up to an additional 5 business days if submitting requests a few days before or after month-end.

Your client can set up a reversionary beneficiary on a pension account when the pension account is opened. To do this, fill out the beneficiary form available from Adviser Tools.

If your client wants to add the reversionary nomination on their existing pension account, they’ll need to commute (converting the pension into a lump sum payment) and recommence a new pension. To do this, they’ll need to complete the Reversionary Nomination form. This may affect Centrelink income support recipients and Commonwealth Seniors Health Card holders. This is because any income test grandfathering will be lost where a full commutation of an existing pension and a commencement of a new pension happens on or after 1 January 2015.  

If your client validly nominates a reversionary pension beneficiary, the Trustee will be bound by it.

The reversionary beneficiary must be either a:

• dependent of your client (for example a spouse, a financial dependent, or a person who has an interdependency relationship who is not a child) or,
• a child of your client who is either:
  • less than 18 years old
  • aged 18 to 24 inclusive and is financially dependent on your client
  • aged 18 or more and has a qualifying disability (broadly, this is a disability that is permanent or likely to be permanent and results in the need for ongoing support and a substantially reduced capacity for communication, learning or mobility).

We won’t accept a reversionary pension nomination made by an attorney or any other agent. To receive a benefit, the beneficiary nominated must meet one of the criteria listed above at the time of your client’s death. 

If the reversionary pension beneficiary has passed away before your client, we’ll generally pay the death benefit to your client’s legal personal representative.  

If the law doesn’t permit the Trustee to pay the nominated reversionary beneficiary a pension when your client passes away, but the nomination is otherwise valid, we’ll pay the death benefit to the nominated reversionary beneficiary as a lump sum. 

A reversionary pension nomination can only be revoked by the client where the person nominated is no longer a valid dependant under super law. An attorney or any other agent cannot revoke a reversionary nomination. We’ll generally ask for evidence that the dependant is no longer valid, in these instances you may need to provide a certified copy of the death certificate.

If your client has switched between super and pension accounts during or since the end of the previous financial year, the tax calculation will be completed for both accounts, with the transactions being processed to the open account.

Where an in-specie transfer of assets is used to commence a pension, the assets aren’t received into the pension account until the day after they’re transferred. Therefore, the value of these assets when the pension commences will generally be different to the transfer value due to market movements. This should be factored in when commencing a pension to avoid exceeding the transfer balance cap.

Your client can either roll over a death benefit pension to another super fund or withdraw the funds. If they’re rolling over a death benefit pension, the receiving super fund must commence a death benefit pension or pay out the benefit as a lump sum death benefit. If your client has an accumulation account, they won’t be able to retain a death benefit in an accumulation account.

To complete the rollover or withdrawal process, your client can complete our withdrawal/rollover form. You can download this form from Adviser Tools.

The only way to be certain that a pension account commences with the exact available transfer balance cap is to transfer cash. We’re unable to transfer a specific value when transferring assets in-specie due to fluctuations in market prices.

Where an in-specie transfer of assets is used to commence a pension (including through the pension update facility), the pension account won’t receive the assets until the day after the transfer. As a result of market movements, the value of these assets when the pension commences will generally be different to the value when the transfer is initiated

This should be factored in when commencing or updating a pension to avoid exceeding the transfer balance cap. From 1 July 2023, the transfer balance cap is indexed to $1.9 million, however, your client may have a different transfer balance cap depending on their circumstances.

Please refer to the ATO website to determine your client’s transfer balance cap, your client can also log into their ATO MyGov account and check their transfer balance account cap information. 

If your client has exceeded the transfer balance cap, they can commute or withdraw the excess amount (inclusive of earnings) before the ATO determination is issued. This excess amount can be moved to the accumulation phase or taken as a lump sum member benefit paid from the pension.

If the excess transfer balance cap issue is not resolved, the ATO will issue a determination letter that will contain a breakdown of the amount to remove from the pension phase including the excess amount and excess transfer balance earnings.

Once the excess transfer balance has been removed, your client should receive a separate excess transfer balance cap tax assessment from the ATO. This tax takes into consideration the number of days your client’s transfer account balance exceeded their transfer balance cap. The tax will be levied on the earnings amount at 15% for first time breaches and 30% for any subsequent breaches.