Scott Morrison, The Treasurer, and Kelly O’Dwyer introduced three Bills into the House of Representatives in the past few days. This paragraph was included:
“3.337 A regulation will be made for the purposes of subsection 295-390(7) to determine liabilities in respect of account based income stream benefits for the proportionate method. This means that superannuation funds who use the proportionate method but whose only superannuation income stream benefit liabilities arise from account based superannuation income stream products will also not be required to obtain an actuary’s certificate for the purpose of determining their exempt current pension income.”
The wording in the ITAA for 295-390(7) is:
“295-390(7) Subsections (4), (5) and (6) do not apply in working out the amounts to be used in the formula in subsection (3) if, at all times during the income year, the liabilities of the fund in respect of superannuation income stream benefits payable at those times were liabilities in respect of superannuation income stream benefits that are prescribed by the regulations for the purposes of this subsection.”
Basically, the legislation is already in place to abolish actuarial certificates by regulation. The vast majority of this work is for account based income streams. The old legacy defined pensions have been steadily reducing. If this is the case – and you can see from the above that it is not a careless statement, but rather a thought out course of action – there are going to be a lot of disappointed actuaries moving on to the next challenge. It will not take admin providers and software developers long to provide the tools to do these rather simple cash weighted calculations.
We will only know with certainty when the regulations are published, but the intent certainly seems to be to remove the actuary’s certificate for account based pensions. I will keep you posted on developments in this area.
The NetActuary Team