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  • Exempt current pension income measure

    As announced in the 2019–20 Federal Budget, superannuation funds will be able to choose their preferred method of calculating exempt current pension income (ECPI) in certain circumstances. These changes will reduce the administrative burden and associated costs for trusteesExternal Link.

    The legislationExternal Link will apply to super trustees that have member interests in both accumulation and retirement phases at one time, but only retirement phase interests at another time, during an income year.

    Providing choice for trustees calculating ECPI

    This measure is subject to receiving royal assent and is not yet law.

    Currently, a fund that has members in both accumulation and retirement-phase may be required to use both the proportionate and segregated methods to calculate ECPI.

    This occurs when:

    • some but not all members are receiving a retirement-phase income stream for part of the income year, then
    • the remaining member(s) in accumulation phase, start a retirement-phase income stream part way through the income year, and
    • for the period in the year when only retirement-phase income streams are being paid, all the fund assets are segregated current pension assets (for example, the fund has no unallocated reserves).

    The new law

    Once legislation is passed, it will apply to assessments for the 2021–22 income year and later income years.

    Super trustees in these circumstances can choose to treat their assets as not being segregated current pension assets. The fund will be able to use the proportionate method when calculating all their ECPI for the income year.

    The law will not affect funds that only pay retirement phase pensions and only have segregated current pension assets (at all times in an income year). These funds will be required to continue to use the segregated method to calculate ECPI.

      Last modified: 11 Nov 2021QC 67280