Superannuation Industry (Supervision) Amendment Regulations 2005 (No. 7) (333 of 2005)

Schedule 2   Amendments commencing on 1 January 2006

[36]   After Schedule 1A

insert

Schedule 1AAB Payment limits for annuities and pensions with a commencement day on and after 1 January 2006

(subregulations 1.05 (4) and 1.06 (4))

1. Subject to clauses 3, 4 and 5, the maximum limits mentioned in paragraph 1.05 (4) (f) or 1.06 (4) (e) are determined under the formula:

AB / PVF

where:

AB means the amount of the annuity account balance, or pension account balance, as the case requires:

(a) on 1 July in the financial year in which the payments are made; or

(b) if that year is the year in which the annuity payments, or pension payments, commence - on the commencement day.

PVF means the maximum pension valuation factor set out in Column 3 of the Table in this Schedule in relation to the item in the Table that represents the age of the beneficiary on:

(a) 1 July in the financial year in which the payments are made; or

(b) if that is the year in which the annuity payments, or pension payments, commence - the commencement day.

2. Subject to clauses 3 and 4, the minimum limits mentioned in paragraph 1.05 (4) (f) or 1.06 (4) (e) are determined under the formula:

AB / PVF

where:

AB means the amount of the annuity account balance, or pension account balance, as the case requires:

(a) on 1 July in the financial year in which the payments are made; or

(b) if that year is the year in which the annuity payments, or pension payments, commence - on the commencement day.

PVF means the minimum pension valuation factor set out in Column 4 of the Table in this Schedule in relation to the item in the Table that represents the age of the beneficiary on:

(a) 1 July in the financial year in which the payments are made; or

(b) if that is the year in which the annuity payments, or pension payments, commence - the commencement day.

3. For a calculation of the maximum or minimum limit in the year in which the commencement day of the pension or annuity occurs if that day is a day other than 1 July, the appropriate value set out in Column 3 or Column 4 of the Table in this Schedule as the case requires, must be applied proportionally to the number of days in the financial year that include and follow the commencement day.

4. An amount determined under the formula in clause 1 or clause 2, is rounded to the nearest 10 whole dollars.

5. In a year in which a PVF of 1 is used in calculating the maximum limit under clause 1, payment of the full account balance may be made at any time during the year.

Table

Example

Clive Long, who turns 65 on 8 February 2006, invests $100,000 in an allocated pension fund on 1 March 2006. The date of the first payment to Mr Long is 1 April 2006.

2005/06: The maximum and minimum payments for 2005/06 are based on:

(a) the account balance on the day of purchase; and

(b) the beneficiary's age of 65 on the day of purchase:

($100,000 / 9.9) x (122 / 365) = $3,376.23 (maximum limit, rounded to $3,380)

($100,000 / 17.3) x (122 / 365) = $1,932.06 (minimum limit, rounded to $1,930)

Assume that total payments to Mr Long at 30 June 2006 are $3,000.

2006/07: The maximum and minimum payments for 2006/07 are based on:

(a) the account balance on 1 July 2006 which is $99,300 (residue $97,000 + earnings of $2,300); and

(b) the beneficiary's age of 65 on 1 July 2006:

$99,300 / 9.9 = $10,030.30 (maximum limit, rounded to $10,030)

$99,300 / 17.3 = $5,739.88 (minimum limit, rounded to $5,740)