What if I do not have an existing pension payment agreement of any kind?
To use this pack to commute your pension, you will need written evidence that the trustee of the fund is required to pay the pension to the member according to super law requirements.
The ATO in Taxation Ruling TR 2013/5 stated that for a pension to exist there must be written evidence of the trustee being compelled to make recurring pension payments to the member. A deed or agreement is not always required, however, the trustee must ensure there is written evidence of the trustee being required to make recurring pension payments in accordance with super law requirements.
If there is no written evidence then there is no pension which can be commuted.
If the trustee needs to confirm the terms of the pension, then the trustee and member need to document that. If you need to document the terms of a current pension then Cleardocs can put you in contact with a lawyer from Maddocks to provide an estimate of fees.
Does the Cleardocs package include a new Pension Payment Agreement that I can use to start a new pension?
No, not as part of this order. But you can place a separate order for a Pension Payment Agreement.
When the commuted lump sum is rolled-over in my SMSF back into my accumulation account, is that lump sum treated as a contribution?
No, it is not treated as a contribution. However, earnings on the assets moved to the accumulation account from the pension account will be taxed at 15% in the fund from the date of roll-over.
Is the lump sum taxed during the commutation process?
As soon as it goes back into the accumulation account, it loses its tax-free status and earnings on the assets moved to the accumulation account from the pension account will be taxed at 15% in the fund.
If the lump sum is not rolled over into an accumulation account, but is cashed out to the member (outside super), that lump sum may be taxed in the member's hands, depending on the member's circumstances.