CRT Alert 042/2020

31 August 2020

Timeframe for reviewing reporting of commutations of market linked pensions

In June 2020 we advised retrospective law had been passed which provided a new way of calculating the debit which arises in an individual’s transfer balance account. This is when a member commutes a market linked pension which is a capped defined benefit income stream.

Funds were required to review any information they had already reported to us where a member had commuted a market linked pension, which was a capped defined benefit income stream and restarted the market linked pension.

At the time we acknowledged the focus funds, trustees, agents and other tax professional had at the time and undertook to provide guidance in August 2020 regarding the time frame in which we expected any review of the fund’s reporting to be completed.

We have been hearing from funds that calculating the value of the debit retrospectively is challenging. We have published updated guidance on how the value of the debit should be calculated.

Due to the delay in publishing this guidance we do not expect any funds to begin to commence their retrospective reporting until November 2020. We anticipate providing additional guidance before the end of November as to when we would expect that retrospective reporting to be completed by. Reporting does not need to be reviewed for a member who is deceased.

For those funds who have not already contacted us, we will contact you to organise a plan to manage your re-reporting. Funds should not re-report until the plan is in place.

Next Steps:

¦ Refer to Updated guidance - market linked pensions