RETIREMENT SAVINGS ACCOUNTS REGULATIONS 1997

PART 1 - PRELIMINARY  

REGULATION 1.07   MEANING OF " PENSION " - SECTION 16 OF THE ACT  

1.07(1)  


A benefit is taken to be a pension for the purposes of the Act if it is provided under terms and conditions of an RSA that:


(a) meet the standards of subregulation (3D); and


(b) do not permit the capital supporting the pension to be added to by way of contribution or rollover after the pension has commenced; and


(c) meet the standards of regulation 1.08A .

1.07(1A)  


A benefit that commenced to be paid before 20 September 2007 is taken to be a pension for the purposes of the Act if it is provided under terms and conditions of an RSA that meet the standards of subregulation (2) or (3A).

1.07(1B)  


A benefit that commenced to be paid on or after 20 September 2007 is taken to be a pension for the purposes of the Act if:


(a) the benefit arises under terms and conditions of an RSA that meet the standards of:


(i) subregulation (3A); and

(ii) subregulation (3D); and


(b) the benefit was purchased with a rollover superannuation benefit that resulted from the commutation of:


(i) an annuity provided under a contract that meets the standards of subregulation 1.05(2) , (9) or (10) of the SIS Regulations; or

(ii) a pension provided under rules that meet the standards of subregulation 1.06(2) , (7) or (8) of the SIS Regulations; or

(iii) a pension provided under terms and conditions of an RSA that meet the standards of subregulation (3A).

1.07(2)  
Terms and conditions of an RSA meet the standards of this subregulation if they at least ensure that:


(a) the pension is not able to be transferred to a person other than a reversionary beneficiary on the death of the primary beneficiary or of another reversionary beneficiary; and


(b) the capital value of the pension, and the income from it, cannot be used as security for a borrowing; and


(c) payments are made at least once in each financial year; and


(d) for a pension that has a commencement day before 1 January 2006 - the payments in a year (excluding payments by way of commutation but including payments made under a payment split) are not larger or smaller in total than, respectively, the maximum and minimum limits calculated in accordance with Schedule 1 ; and


(da) for a pension that has a commencement day on or after 1 January 2006 - the payments in a year (excluding payments by way of commutation but including payments made under a payment split) are not larger or smaller in total than the following:


(i) for payments made during the period starting on 1 January 2006 and ending on 30 June 2006 - the respective maximum and minimum limits for the year calculated in accordance with 1 of the following Schedules:

(A) Schedule 1 ;

(B) Schedule 1A ;

(ii) for payments made on or after 1 July 2006 - the respective maximum and minimum limits for the year calculated in accordance with Schedule 1A ; and


(e) for a pension that has a commencement day before 1 January 2006 - before full commutation or transfer of the pension, a payment at least equal to the minimum limits calculated in accordance with Schedule 1 must be made; and


(ea) for a pension that has a commencement day on or after 1 January 2006 - before full commutation or transfer of the pension, a payment is made that is:


(i) for a payment made during the period starting on 1 January 2006 and ending on 30 June 2006 - at least equal to the minimum limit for the year calculated in accordance with which 1 of the following Schedules was chosen for the pension under paragraph 1.07(2)(da):

(A) Schedule 1 ;

(B) Schedule (1A) ;

(ii) for a payment made on or after 1 July 2006 - at least equal to the minimum limit for the year calculated in accordance with Schedule 1A .

1.07(3)  
For the purpose of determining whether the terms and conditions meet the standards in paragraphs (2)(c) and (d), it is immaterial:


(a) that:


(i) the commencement day occurs on or after 1 April in a financial year; and

(ii) the terms and conditions do not provide for the payment of an amount in that financial year that meets the standard for the minimum limit in paragraph (2)(d); or


(b) that the terms and conditions do not ensure that the payments in the year in which the pension is to end meet the standard for the minimum limit in paragraph 2(d).

1.07(3A)  


Terms and conditions of an RSA that provides a benefit ( the market linked pension ) meet the standards of this subregulation if they at least ensure that:


(a) the market linked pension:


(i) is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary's life expectancy on the commencement day of the pension, rounded up to the next whole number if the primary beneficiary's life expectancy does not consist of a whole number of years; or

(ii) is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary's life expectancy mentioned in subparagraph (i) calculated, at the option of the primary beneficiary, as if the primary beneficiary were up to 5 years younger on the commencement day; or

(iia) if the pension has a commencement day on or after 1 January 2006 - the pension is paid at least annually to the primary beneficiary or reversionary beneficiary throughout a period that is not less than the period available under subparagraph 1.07(3A)(a)(i), and not more than the greater of the following periods:

(A) the maximum period available to the primary beneficiary under subparagraph 1.07(3A)(a)(ii);

(B) the period of years equal to the number that is the difference between the age attained by the primary beneficiary at his or her most recent birthday before the commencement day, and 100; or

(iii) if:

(A) the pension is a pension that reverts to a surviving spouse on the death of the primary beneficiary; and

(B) the life expectancy of the primary beneficiary's spouse is greater than the life expectancy of the primary beneficiary; and

(C) the primary beneficiary has not chosen to make an arrangement mentioned in subparagraph (i), (ii) or (iia) for the pension;
the pension is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to:

(D) the life expectancy of the spouse on the commencement day; or

(E) the life expectancy of the spouse calculated, at the option of the primary beneficiary, as if the spouse were up to 5 years younger on the commencement day; or

(F) if the pension has a commencement day on or after 1 January 2006 - a period that is not less than the period available under sub-subparagraph 1.07(3A)(a)(iii)(D), and not more than the greater of the following periods:

(I) the maximum period available under sub-subparagraph 1.07(3A)(a)(iii)(E);

(II) the period of years equal to the number that is the difference between the age attained by the spouse at his or her most recent birthday before the commencement day, and 100;
at the option of the primary beneficiary, and rounded up to the next whole number if the life expectancy of the spouse, or the period, does not consist of a whole number of years; and


(b) the total amount of the payments to be made in a year (excluding payments by way of commutation but including payments made under a payment split) is determined in accordance with Schedule 4 ; and


(c) the market linked pension does not have a residual capital value; and


(d) the terms and conditions of the market linked pension meet the standards of regulation 1.08 ; and


(e) the market linked pension cannot be commuted except:


(i) if the pension is not funded from the commutation of:

(A) another pension that is provided under terms and conditions that meet the standards of this subregulation; or

(B) an annuity that is provided under a contract that meets the standards of subregulation 1.05(2) , (3) , (9) or (10) of the SIS Regulations; or

(C) a pension that is provided under rules that meet the standards of subregulation 1.06(2) , (3) , (7) or (8) of the SIS Regulations
and the commutation is made within 6 months after the commencement day of the pension; or

(ii) subject to subparagraph (iii), on the death of the primary beneficiary or reversionary beneficiary, by payment of:

(A) a lump sum or a new pension to one or more dependants of either the primary beneficiary or reversionary beneficiary; or

(B) a lump sum to the legal personal representative of either the primary beneficiary or reversionary beneficiary; or

(C) if, after making reasonable enquiries, the provider of the pension is unable to find a person mentioned in sub-subparagraph (A) or (B) - a lump sum to another individual; or

(iii) for subparagraph (ii), if the primary beneficiary has opted, under subparagraph (a)(iii), for a period worked out in relation to the life expectancy or age of the primary beneficiary's spouse - the market linked pension cannot be commuted until the death of both the primary beneficiary and the spouse; or

(iv) if the superannuation lump sum resulting from the commutation is transferred directly to the purchase of:

(A) another pension that is provided under terms and conditions that meet the standards of this subregulation; or

(B) an annuity that is provided under a contract that meets the standards of subregulation 1.05(2) , (3) , (9) or (10) of the SIS Regulations; or

(C) a pension that is provided under rules that meet the standards of subregulation 1.06(2) , (3) , (7) or (8) of the SIS Regulations; or

(v) to pay a superannuation contributions surcharge; or

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

(vii) for the purpose of paying an amount under Division 131 or 135 in Schedule 1 to the Taxation Administration Act 1953 , or section 292-80C of the Income Tax (Transitional Provisions) Act 1997 , to give effect to a release authority in respect of the primary beneficiary; or

(viii) the market linked pension was commenced in contravention of Part 4 and the commutation would result in an obligation to pay an amount to the Commissioner of Taxation under subsection 20F(1) of the Superannuation (Unclaimed Money and Lost Members) Act 1999 ; and


(f) if the market linked pension reverts, it does not have a reversionary component greater than 100% of the account balance immediately before the reversion; and


(g) if the market linked pension is commuted, the commutation amount cannot exceed the account balance immediately before the commutation; and


(h) the market linked pension can be transferred only:


(i) on the death of the primary beneficiary:

(A) to 1 of the dependants of the primary beneficiary; or

(B) to the legal personal representative of the primary beneficiary; or

(ii) on the death of the reversionary beneficiary:

(A) to 1 of the dependants of the reversionary beneficiary; or

(B) to the legal personal representative of the reversionary beneficiary; and


(i) the capital value of the market linked pension, and the income from it, cannot be used as security for a borrowing.

1.07(3B)  


Terms and conditions mentioned in subregulation (3A) are not prevented from meeting the standards of that subregulation by reason only that the terms or conditions provide that, if the commencement day of the pension is on or after 1 June in a financial year, no payment is required to be made for that financial year.

1.07(3C)  


Despite section 7 of the Income Tax Assessment (1936 Act) Regulation 2015 , for a pension that has a commencement day on or after 20 September 2004 and on or before 31 December 2004, one of the following life tables are to be used in ascertaining the life expectancy of a person under this regulation:


(a) the most recently published Australian Life Tables;


(b) the 1995-97 Australian Life Tables .

1.07(3D)  


Terms and conditions for the provision of a benefit (the pension ) meet the standards of this subregulation if the terms and conditions ensure that payment of the pension is made at least annually, and also ensure that:


(a) the total of payments in any year (excluding payments by way of commutation but including payments under a payment split) is at least the amount calculated under clause 1 of Schedule 5 ; and


(b) the pension is transferable only on the death of the beneficiary (primary or reversionary, as the case may be); and


(c) the capital value of the pension and the income from it cannot be used as a security for a borrowing.

1.07(3E)  


Terms and conditions of an RSA do not meet the standards of any of subregulations (2), (3A) or (3D) if, in relation to the death of the beneficiary on or after 1 July 2007, the pension is transferred or paid to a person who would not be eligible to be paid a benefit in the form of a pension under subregulation 4.24(3A) or (3B) .

1.07(4)  


A benefit that is a pension provided under an RSA does not cease to be a pension for the purposes of the Act if the terms and conditions of the RSA do not meet the standards of subregulation (2) merely because of a payment split in respect of the RSA and any reasonable fees associated with the payment split.

1.07(5)  


In this regulation:

rolled over
means paid as a superannuation lump sum within the superannuation system.




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