SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994

PART 1A - ANNUITIES AND PENSIONS  

Division 1A.1  

REGULATION 1.07B   COMMUTATION OF OTHER ANNUITIES AND PENSIONS  

1.07B(1)   [Application]  

This regulation applies in relation to the following:


(a) a contract mentioned in paragraph 1.05(1)(e) , (1A)(f) or (1B)(c) for a benefit (the annuity );


(b) a contract mentioned in paragraph 1.05(1A)(g) for a benefit that is an annuity under sub-subparagraph 1.05(1A)(g)(i)(B) (the annuity );


(c) rules of a superannuation fund mentioned in paragraph 1.06(1)(c) , (1A)(d) or (1B)(c) for a benefit (the pension ).

1.07B(2)   [``payment year'']  

For this regulation, other than for subregulation (5), the payment year for an annuity or pension means the period of 12 months that begins on the day after:


(a) the commencement day; or


(b) the anniversary of the commencement day.

1.07B(3)   [Commutation]  

The contract or rules, meet the standards of this regulation if the contract or rules ensure that the annuity or pension cannot be commuted, in whole or in part, unless:


(a) the commutation results from the death of an annuitant or pensioner or a reversionary annuitant or reversionary pensioner; or


(b) the sole purpose of the commutation is:


(i) to pay a superannuation contributions surcharge; or

(ii) to give effect to an entitlement of a non-member spouse under a payment split; or

(iii) to meet the rights of a client to return a financial product under Division 5 of Part 7.9 of the Corporations Act 2001 ; or


(c) the annuity or pension has paid, in the payment year in which the commutation is to take place, at least the minimum amount under subregulation (4).

1.07B(4)   [Minimum annual amount]  

For paragraph (3)(c), the minimum amount is calculated using the formula:


Minimum annual amount × Days in payment period
  Days in payment year

where:

Days in payment period
means:


(a) the number of days in the period that:


(i) begins on:

(A) the day after the anniversary of the commencement day that occurs before the day on which the commutation is to take place; or

(B) if the annuity or pension commenced on the day before the start of the payment year in which the commutation is to take place - the day after the commencement day; and

(ii) ends on the day on which the commutation is to take place; or


(b) if subregulation (5) applies - 1 day.

Days in payment year
means the number of days in the payment year in which the commutation is to take place (365 or 366).

Minimum annual amount
means:


(a) for an annuity mentioned in paragraph (1)(b) - the minimum amount that the annuity would pay as fixed-size payments in the payment year if the annuity were not commuted; and


(b) otherwise - the minimum amount that the annuity or pension would pay in the payment year if the annuity or pension were not commuted.

1.07B(5)   [Commencement of annuity]  

If the commencement day for an annuity or a pension is the day on which the commutation of the annuity or pension is to take place:


(a) the payment year is taken to commence on the commencement day and end on the day before the anniversary of the commencement day; and


(b) there is taken to be 1 day in the payment period.

1.07B(6)   [Future CPI]  

If, to calculate the minimum annual amount, it is necessary to use a future unknown value of the CPI, that value is taken to be equal to the CPI for the last known quarter.




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