Source: http://clik.dva.gov.au/print/book/export/html/16549
Timestamp: 2019-10-22 10:51:26
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﻿ 10.4 Superannuation Funds
Home > Compensation and Support Policy Library > Part 10 Types of Income and Assets > 10.4 Superannuation Funds
This chapter contains information on the accumulation phase [2] of superannuation, including outlines of the various types of superannuation structures.
It also covers the assessment of income from withdrawals of superannuation benefits.
Chapter 9.1 Income and Assets Test Principles [3]
Chapter 9.5 Deeming Provisions [4]
Chapter 10.1 Ordinary Income [5]
Chapter 10.2 Assets [6]
Chapter 10.5 Income Streams [7]
distribute benefits to beneficiaries of the superannuation fund [2] during the draw down phase [2].
accumulation or defined contribution funds, where contributions are defined for employers and employees [2] such as a percentage of salary, and
defined benefit funds, where the employee's contributions are defined and the employer contributes whatever additional amounts are needed to meet the fund's obligations to its beneficiaries. More → [10]
An eligible termination payment [2] is a lump sum payment, made by an employer or a superannuation fund when a person leaves employment, by:
Roll-over [2] funds are approved investment funds for eligible termination payments, some of which must be preserved.
reaches preservation age [2], and
The superannuation legislation allows early release of preserved superannuation benefits [2] in limited circumstances. Circumstances include severe financial hardship, specified grounds such as medical treatment or permanent incapacity, and in special circumstances where a person has permanently departed Australia.
The following factors govern the assessment of a pensioner's superannuation assets by DVA [2]
the person's history of income support. More → [12]
Prior to 1 July 2013, the compulsory superannuation guarantee contributions paid by employers are limited to employees under 70 years of age, and are paid at a minimum of 9% of the employee's ordinary time earnings. This applies whether the person is in full time, part time or casual employment. Employers are required to pay these amounts into a complying superannuation fund [2].
For a person who has attained pension age [2], the superannuation fund money (including the compulsory employer contributions) may be held in accumulation mode, with the current value being assessed as a financial asset and deemed. At the time of converting the superannuation fund money to pension, the income stream rules apply.
It is not necessary for pensioners to notify the Department of their compulsory superannuation guarantee contributions, as they are not assessed as income [2]. Increases in the value of the superannuation fund investment held in accumulation mode are reportable.
Pensioners also need to notify the commencement of a pension payment by providing an income stream schedule [13]. The income support assessment depends on the commencement date of the income stream and whether the owner has continuously received an income support payment since 31 December 2014. The income stream will be assessed by either:
deeming [14] the current account balance, or
including the gross annual payments (less a deduction for the return of the original purchase price) [15].
10.4.2/What is Superannuation? [17]
10.4.2/Types of Superannuation Funds [19]
10.4.3/Early Release of Superannuation Benefits [21]
Chapter 3.10 Financial Hardship [22]
Section 10.4.3 [24]
10.5.4 Income Assessment of Purchased Income Streams [15]
any of the following funds (unless the fund is a foreign superannuation fund [27]):
Section 5J(1) of the VEA [28] defines a superannuation benefit, in relation to a person, as a benefit arising directly or indirectly from amounts contributed (whether by the person or by any other person) to a superannuation fund in respect of the person.
It also contains information about the types of superannuation schemes, eligible termination payments [2] and roll-over [2] funds.
The two main types of superannuation funds
The following table shows the differences in treatment of contributions and benefits between the two main types of superannuation funds [2].
Accumulation or defined contribution
Defined for employers and employees [2] such as a percentage of salary
Lump sum - Amount depends on performance of fund and amount of contributions.
Employers contribute whatever additional amounts are needed to meet fund's obligations to its beneficiaries.
Income stream; or
Amount is usually based on final salary or average final salary (often the last 3 years) x a multiple. The multiple itself is usually a combination of length of membership and a percentage of final salary for each year of service.
Examples of superannuation schemes
The various types of employer sponsored and personal superannuation schemes include:
Public sector funds established for Australian and state government employees,
Corporate funds established by medium to large private sector companies for their employees,
Industry, or multi employer, funds for paying employer contributions to superannuation for employees covered by particular awards,
Self-managed superannuation funds (SMSF) and small APRA funds [2], More [33]
ATO Small Superannuation Accounts [2], designed for employer contributions which any other superannuation fund will not accept,
Retirement savings accounts offered by banks,
Retail funds or public offer funds, covering superannuation funds available to the general public, including employers and the self employed.
10.5.5/Description of Self Managed Superannuation Funds and Small APRA Funds [34]
This section contains information on the income [2] and assets [2] testing, in the accumulation phase [2], of income from withdrawals of superannuation benefits [2].
Section 5H(8) (i) [39] VEA
Section 5J(1) (1A) [40] VEA
Section 52(1) (f) [41] VEA
No income or asset value is assessed from superannuation in the accumulation phase where the person is below pension age [2]. If the person has reached pension age, the superannuation is assessed under the income and assets tests as a financial asset [2].
Section 52AA [45] VEA
VEA → [47]
Part IIIB, Division 4 [48] VEA – Income from income streams
Part IIIB, Division 11, Subdivision A [49] VEA – Value of person's assets
The income and asset value of superannuation in the drawdown phase is assessed according to the income stream [2] rules. This also applies if the superannuation is in the drawdown phase and the person is below pension age.
More → [51]
More → [52]
The assessable asset value of whole of life superannuation policies is the accumulated superannuation benefit [2] shown on the pensioner's latest statement of account. The amount payable from the policy in the event of the death of the insured party is not relevant.
Create a new superannuation interest in the non-member spouse's name in the same superannuation fund [2]
Transfer or roll-over [2] a lump sum to a retirement savings account or another superannuation fund in the non-member spouse's name.
More → [53]
Chapter 9.5 [4]
More → (go back) [54]
Chapter 10.5 [7]
More → (go back) [55]
10.2.4/Assessing Life Insurance Policies [56]
More → (go back) [57]
Section 10.5.6 [58]
More → (go back) [59]
According to section 5J(1) [28] of the VEA a financial asset means;
According to subsection 5J(1) of the VEA [28], an income stream includes:
an income stream designated in writing by the Commission for the purposes of this definition, having regard to the guidelines determined under subsection 5J(1F) of the VEA [28];
The superannuation law [2] allows release of preserved superannuation benefit [2] when the person has reached preservation age [2] and the person either:
a person has met the income support payment [2] requirements,
the rules of the superannuation fund [2] permit release.
The following table shows the conditions to be met for people who request the early release of their superannuation benefits to be classed as being in severe financial hardship. Different conditions apply where the superannuation benefit [2] is held in the Superannuation Holding Accounts Reserve [2].
Applications for release of superannuation benefits on the grounds of severe hardship are made to the person's superannuation fund, and must be submitted with a letter confirming the period of the person's income support payments received from DVA [2]. DVA does not have any role in whether all of the conditions for early release of benefits have been met. DVA's only role is to supply, on request from a person, confirmation that the pensioner has received income support payments for the required period.
Chapter 12.1 [62]
More → (go back) [63]
More → [65]
10.5.3/Additional Rules Regarding Commutation [66]
One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL). [68]
superannuation investments in the accumulation phase [2] are assessable as a financial investment [2] More [70]
superannuation investments in the drawdown phase are assessable under the income stream [2] rules. More ? [71]
Source URL (modified on 01/08/2017 - 2:00am): http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/104-superannuation-funds
[1] http://clik.dva.gov.au/user/login?destination=node/16549%23comment-form
[3] http://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/91-income-and-assets-test-principles
[4] http://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/95-deeming-provisions
[5] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/101-ordinary-income
[6] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/102-assets
[7] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams
[8] http://clik.dva.gov.au/user/login?destination=node/16317%23comment-form
[9] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn585
[10] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn586
[11] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn587
[12] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn588
[13] http://awsp76:81/sites/default/files/dvaforms/D0563.pdf
[14] http://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/95-deeming-provisions/957-deemed-income-account-based-income-streams-0
[15] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1054-income-and-assets-assessment-income-streams/income-assessment-purchased-income-streams
[16] http://clik.dva.gov.au/book/export/html/16549#tgt-More_ftn1
[17] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/104-superannuation-funds/1042-description-superannuation/what-superannuation
[18] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn585
[19] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/104-superannuation-funds/1042-description-superannuation/types-superannuation-funds
[20] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn586
[21] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/104-superannuation-funds/1043-assessment-superannuation-benefits/early-release-superannuation-benefits
[23] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn587
[24] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/104-superannuation-funds/1043-assessment-superannuation-benefits
[25] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn588
[26] http://clik.dva.gov.au/book/export/html/16549#ref-More_ftn1
[27] http://clik.dva.gov.au/glossary/foreign-superannuation-fund
[30] http://clik.dva.gov.au/user/login?destination=node/16484%23comment-form
[31] http://clik.dva.gov.au/user/login?destination=node/16430%23comment-form
[32] http://clik.dva.gov.au/user/login?destination=node/16554%23comment-form
[33] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn589
[34] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1055-special-provisions-regarding-self-managed-superannuation-funds-and-small-apra-funds/description-self-managed-superannuation-funds-and-small-apra-funds
[35] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn589
[36] http://clik.dva.gov.au/user/login?destination=node/16506%23comment-form
[37] http://clik.dva.gov.au/user/login?destination=node/16403%23comment-form
[38] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn590
[39] clik://LEGIS/VEA/section 5H(8)
[40] clik://LEGIS/VEA/section 5J(1)
[41] clik://LEGIS/VEA/section 52(1)
[42] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn590
[43] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn591
[44] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn592
[45] clik://LEGIS/VEA/section 52AA
[46] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn592
[47] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn593
[48] clik://LEGIS/VEA/Div 4/Part IIIB
[49] clik://LEGIS/VEA/SubDiv A/Div 11/Part IIIB
[50] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn593
[51] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn594
[52] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn595
[53] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn596
[54] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn591
[55] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn594
[56] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/102-assets/1024-assessing-personal-assets-and-investments/assessing-life-insurance-policies
[57] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn595
[58] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1056-special-provisions-regarding-family-law-affected-income-streams
[59] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn596
[60] http://clik.dva.gov.au/user/login?destination=node/16358%23comment-form
[61] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn597
[62] http://clik.dva.gov.au/compensation-and-support-policy-library/part-12-compliance-and-obligations/121-recipient-obligations
[63] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn597
[64] http://clik.dva.gov.au/user/login?destination=node/16535%23comment-form
[65] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn598
[66] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1053-general-provisions-assessing-income-streams/additional-rules-regarding-commutation
[67] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn598
[68] http://clik.dva.gov.au/glossary/assets-value-limit-avl
[69] http://clik.dva.gov.au/user/login?destination=node/16428%23comment-form
[70] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn599
[71] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn600
[72] http://clik.dva.gov.au/book/export/html/16549#tgt-cspol_part10_ftn601
[73] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn599
[74] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn600
[75] http://clik.dva.gov.au/book/export/html/16549#ref-cspol_part10_ftn601