POWERED BY MOMENTUM MEDIA
ATO misguided on pension rollover portal
Pension accounts should not be processed through the Australian Taxation Office's (ATO's) proposed online portal, according to a submission made by the Association of Superannuation Funds of Australia (ASFA).
It said pension accounts were too complex to be rolled over remotely by a super fund member online.
ASFA said that likening a change in pension providers to rolling over an accumulation account benefit did not take into account law and practice - a 'wrong' decision would be significant and irreversible.
ASFA said minimum pension payments and over-payments needed to be confirmed prior to the account transferring to a different provider.
It said any exemptions from pension assets tests with market-linked pensions would cease upon commutation, while the commutation rules around market-linked pensions were restrictive. It was difficult to see how information could be collected and provided through the Commissioner of Taxation, ASFA said.
The outcome of transferring to an existing pension account could be that the rollover request was rejected by the receiving fund, or the trustee of the receiving fund interpreted the receipt of money as a request to commute the existing pension to a lump sum and combine the two lump sums in a new pension account, ASFA said.
It called for regulation 6A.02 to be amended to include an additional condition that either the request not be in respect of an account-based pension, allocated pension or market-linked pension, or alternatively that the request not be in respect of a pension.
ASFA said the Superannuation Industry (Supervision) Regulations 6.33 needed to be amended to place responsibility for the establishment of the member's proof of identity with the ATO.
The industry body also pushed for the establishment of a process to identify 'risk only'/'insurance only' accounts that would be prevented from being rolled over using the portal to avoid mistakenly cancelling a member's insurance policy.
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