Actuarial Certificates

Account Based Pensions

In order to ensure that account based pensions are adequately provided by the superannuation fund assets,  an actuarial certificate is required. Actuarial certificates can be used to “segregate” assets into those supporting “current pension liabilities”. When assets are not “segregated”, an actuarial certificate is required to ascertain the proportion of pension income that is tax free.

 

Certificates can also be provided for maximum and minimum permissible account based pensions.

 Fees (Exclusive of GST)

Account based pension fund certificate

$200

Pension fund apportionment certificate

$150

 

Defined Benefit Complying Pensions

Australian Accounting Standard (AAS) 25 certificates

In order to satisfy Reasonable Benefit Limits, retirees must take at least one half of their superannuation benefits in a complying pension.  To test this, the pensions are valued using factors published to satisfy AAS25.  Sometimes, the cost of supplying the complying pension may be understated, using the regulatory factors.  In such cases, the client is advised in relation to the funding requirements.

In the case of fixed term and lifetime and term certain (or a combination of these) pensions, the fund will require annual actuarial certification, which will state whether there is a high probability (70%) that there are sufficient funds to meet the liabilities.

Where assets are not segregated, an annual actuarial certificate is required to determine the tax free proportion of income that applies to current pension liabilities.

Income Tax Act and Superannuation Industry Supervision (SIS) Regulations.

Actuarial certificates are required for the above pensions for the following purposes:

- Income Tax 1997 Section 295-390 Actuarial Certificate in respect of assets supporting current pension liabilities.

- SIS Regulation 9.29(b). This requires an actuarial investigation and valuation at the date that the fund became a defined benefit fund and annually thereafter.

- SIS Regulations 9.31(1)(ba). This requires a statement of the actuary’s opinion on whether, at the valuation date, there is a high degree of probability that the fund will be able to pay the pension as required under the fund’s governing rules.

Tax Free Components for Account Based Pensions

An actuarial certificate is required to show that a superannuation fund can meet its contracted account based pensions.

These certificates can be used to “segregate” assets into those supporting “current pension liabilities”.  Where assets are not segregated, an annual actuarial certificate is needed to specify the proportion of income that applies to current pension liabilities.  This proportion is tax free.

FERM can  also provide certificates showing the maximum and minimum permissible account based pensions and projections of the funds.


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