Life Expectancy Pension Rules

The superannuation fund rules must ensure the following [SIS regulation 1.06(7)]:

1. The commencement day is the day when the primary beneficiary became entitled to the pension if that occurred after 20 September 1998.

2. The primary beneficiary became entitled to the pension on or after his or her Age Pension age[1].

3. The pension is payable for the life expectancy of the primary beneficiary at the commencement date, or if this exceeds 15 years, between 15 years and the life expectancy of the primary beneficiary at the commencement date.

4. The annual pension does not increase by more than 5% or the annual rate of CPI increase[2] plus 1% pa, whichever is the lesser.

5. The amount of pension payment can be varied only to allow:

   1. commutation to pay a superannuation contributions surcharge; or

   2. an amount to be paid under a Family Law payment split and reasonable fees in respect of the payment split to be charged.

6. The pension does not have a residual capital value.

7. The pension cannot be commuted except when:

   1. the commutation is made within 6 months after the commencement day of the pension; or

   2. the commutation is made within 10 years after the commencement day of the pension to the benefit of a reversionary beneficiary on the death of the primary beneficiary; or

   3. the eligible termination payment resulting from the commutation is transferred directly to the purchase of another benefit provided as a lifetime or life expectancy pension or annuity.

   4. to pay a superannuation contributions surcharge; or

   5. to give effect to an entitlement of a non-member spouse under a Family Law payment split.

8. If the pension reverts or is commuted, it does not have a reversionary component greater than 100% of the benefit that was payable before the reversion or the commutation.