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Adding or updating a pooled lifetime income stream 108-19041857

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This document outlines the procedure that explains how to assess and key pooled lifetime income stream products.

All appropriately skill-tagged Service Officers can process new and existing lifetime income streams at the point of contact for all payment types.

Process Direct

Staff trained in Process Direct select the Process Direct tab. Staff not trained in Process Direct, select Customer First.

On this page

Verifying and recording assets changes

Keying a new pooled lifetime income stream

Verifying and recording assets changes


Table 1

Expand table

Step

Action

1

Check update(s) required

If the customer has purchased a new income stream using funds from selling their principal home and they intend to use some or all the funds to purchase a new home, See Sale of principal home.

If the pooled lifetime income stream has reverted to the customer, the reversionary income stream must be added in Customer First, see Table 1 Step 1 for Customer First.

If the customer has supplied an income stream schedule to a service centre, upload a copy to the customer's record.

Is the customer contacting to add or update a pooled lifetime income stream?

2

Discuss updates with customer

Discuss all income and asset updates the customer would like to make during their contact (for example, income stream, shares, foreign income).

Only proceed if all required updates are able to be completed.

  • Do not add new pooled lifetime income streams without an income stream schedule
  • Do not request an income stream schedule or add a pooled lifetime income stream where it is known that the income stream was purchased with superannuation and has not yet reached its assessment day and is exempt

Before starting the update

Check:

  • Where did the money to buy the income stream come from?
    • Was the income stream purchased, or is being purchasing by instalments using superannuation money, including contributions while still in accumulation?
    • For example, if the customer used a superannuation investment recorded on Managed Investment (MIS/MIP/MIUS) to purchase a Lifetime Pooled (Superannuation) (LPS) product. An update on the MIS/MIP/MIUS will be needed and in the same activity.
    • Lifetime Pooled (non-superannuation) (LPO) Products can be purchased with ordinary money, not converted from superannuation in accumulation. Updates may be needed to other financial investments, such as bank accounts on SVS.
  • Has the income stream reached its assessment day, i.e.
    • if purchased with superannuation, meet a condition of release, e.g. 65 years of age, retirement or commenced payment?
    • If purchased with non-superannuation money has the person reached Age Pension Age or the income stream commenced payment?
  • Is it a reversionary income stream? This may be on the income stream schedule:
    • A reversionary income stream has been passed on to another person after the death of the primary beneficiary
    • Note: the date of the death of the primary beneficiary will be needed for later coding
    • It must be the same income stream, that is, the details are the same as they were for the primary beneficiary
    • If it was pre 1/7/2019 and grandfathered before being transferred to the customer, it can retain its grandfathered status.
  • Was it purchased as a result of a family law split? (on the income stream schedule):
    • if the original income stream was pre 1/7/2019 and grandfathered, the new product can retain its grandfathered status in some circumstances
    • If the income stream is reversionary, or from a family law split, note the information as it will be needed during coding and when checking the Entitlements (ELD) outcome
  • Check the ownership of the product on any provided or scanned income stream schedules and determine if this may be a jointly owned product.

What documentation is required:

  • For all new pooled lifetime income streams and for any partial commutations from an existing pooled lifetime income streams, a Details of income stream product (SA330) or similar schedule completed by the provider
  • Any other supporting documentation to assist with the coding of other income and asset updates. If there are concerns with the legitimacy of the customer's information, see Coding income and assets for Centrelink payments and services.

Can the customer provide all information required and can all updates for this contact be keyed?

3

Request documents

Tell the customer all information is required before any change can be made to ensure they receive correct entitlement:

Note: where the customer or partner is unable, or unwilling, to provide information due to Family and Domestic Violence (FDV), escalate to AISR support. AISR support will request the information directly from the provider.

Procedure ends here until documents returned.

4

Check if the income stream is paid from a self-managed superannuation fund (SMSF) or small APRA fund (SAF)

Pooled lifetime income streams cannot be paid from a SMSF or SAF.

Is the income stream paid from an SMSF, or a SAF?

5

Date of purchase

Was the income stream purchased on or after 1 July 2019?

6

Adding or updating income stream

If the customer or their partner is:

  • providing information as part of a review, see Income stream indexation review. Procedure ends here
  • advising a change to the gross income from an existing pooled lifetime income stream, go to Step 7
  • advising of a new pooled lifetime income stream purchased with superannuation that has not yet reached its assessment day, procedure ends here
  • advising new pooled lifetime income stream details with a purchase date on or after 1 July 2019, see Table 2 > Step 1
  • advising partial or full commutation (closure) of income stream, see Commutation of asset-tested income streams. Procedure ends here
  • advising of an instalment payment, go to Step 9

7

Change to gross income - check existing record

Launch the Process Direct Income and Assets Update workflow. To do this access the customers record in Process Direct Customer Summary,

  • Use Super Key field to navigate to screens
  • Enter START into the Super Key
  • Select Income and Assets Update from the Task Selector options
  • Select Income Streams (SUPS/SUPI/SUPV)
  • Select Start to initiate the workflow

On the Income Stream (SUPS, SUPI, SUPV) screen of income stream owner's record.

Are there details for the pooled lifetime income stream recorded?

The product type code is LPO - Lifetime pooled income stream (Non-Sup) where product is purchased with non-superannuation money or LPS - Lifetime pooled income stream (Sup) where product is purchased with superannuation money).

8

Update gross income

To update:

  • Expand Closed chevron the appropriate product from Income Streams (SUPS, SUPI, SUPV)
  • check details on are correct
  • On the Income Stream Details line add Adding a new line a new entry, check the Indexation Method

Make the necessary updates to the following fields:

  • Event Date: date of change in the income, for example, CPI indexation date
  • Gross Income Amount: new gross income amount
    Note: changes in income for pooled lifetime income stream is not dependent solely on indexation, and can vary with the returns on investment, age, life expectancy and other factors relevant to mortality. For example, income changes can be aligned to changes in the Reserve Bank of Australia (RBA) cash rate
  • Income Frequency: frequency of the payment (if changed)
  • Next Indexation Date: check the indexation date. If the previous indexation date is correct and the new gross income reported is following CPI indexation, advance the indexation date by 1 year
    Note: this date, by default, tends to be the anniversary of the purchase date. It is not 1 year from the date of receipt of requested information or the date from when the income is updated. Where the event date of an income change is not the indexation or anniversary date, for example, the date of an arbitrary change in the RBA cash rate, or if the previous indexation date is not correct, update the new date as the future anniversary date. The annual reviews and updates will now generate correctly
  • Surrender Value: ONLY UPDATE if the income stream schedule indicates the surrender value is more than the amount allowed under SIS Regulations Capital Access Schedule, key this field with the amount stated
  • Death Benefit: ONLY UPDATE if the income stream schedule indicates the death benefit value is more than the amount allowed under SIS Regulations Capital Access Schedule, key this field with the amount stated
  • Click Save once updates made
  • Update Receipt Date and Channel and click Save
  • Click Assess
  • Check the payment outcome on Entitlements (ELD) screen and click on Finish
  • If the Service Officer has used the Process Direct Income and Assets workflow, Notes will prepopulate automatically and display for review when Finish is selected
  • At this point any additional information can be added, as per Online Document Recorded (ODR)

Once Notes are complete, Finalise. The transaction will complete and Notes replicate to the Document List (DL).

  • In Customer First check if there is an indexation review for this product on the FAL screen. Ensure it is finalised to prevent a reminder letter being sent or payment being suspended

Procedure ends here.

9

Update instalment amount

Do not update an existing instalment date or amount. Before the application of any increase by the current upper deeming rate, only a specialist staff member can delete the latest instalment. Instalments cannot be coded after commencement of payment.

Refer to the Level 2 Policy Helpdesk if the customer advises the existing instalments are incorrect.

To update:

  • Expand Closed chevron the appropriate product from Income Streams (SUPS, SUPI, SUPV)
  • On Pension/Annuities Instalments line select add Adding a new line to access the Create Pension Details options
  • Instalment Date: date of the instalment payment, as stated on the schedule or advised by the customer. If assessment day is more than 12 months from the purchase date, or any instalment date, the instalment is automatically increased by the current upper deeming rate on each instalment amount’s anniversary date until the assessment date
  • Amount: amount of the instalment. Each instalment is increased by the current upper deeming rate on the anniversary of each payment until the assessment date. The screen will list all the compounded instalment amounts
  • Event Date: the system will auto-update this field for the instalment date, and compounding upon each anniversary and the assessment date
  • Click Save once updates made
  • Update Receipt Date and Channel and click Save
  • Click Assess
  • Check the payment outcome on Entitlements (ELD) screen and click on Finish
  • If the Service Officer has used the Process Direct Income and Assets workflow, Notes will prepopulate automatically and display for review when Finish is selected
  • At this point any more information can be added, as per Online Document Recorded (ODR).

Once Notes are complete, Finalise. The transaction will complete and Notes replicate to the Document List (DL).

Procedure ends here.

10

Schedule provided

Has the customer or partner supplied a Details of income stream product (SA330) or similar schedule providing details for each income stream?

  • Yes, see Table 2 > Step 1
  • No, request an SA330 or tell the customer to provide a similar schedule issued by their provider, see Requesting information (CLK):
    • use the Mail Forms (MAIL) screen if a form needs to be sent
    • the customer must provide an income stream schedule for each income stream they own
    • tell the customer the SA330 form must be completed by the income stream provider for income streams purchased from a retail provider
    • procedure ends here until documents are received


Keying a new pooled lifetime income stream


Table 2

Expand table

Step

Action

1

Record a new income stream

Do not add a pooled lifetime income streams where it is known that the income stream was purchased with superannuation and has not yet reached its assessment day and is exempt.

The Income and Assets Update Task Selector (START) in Process Direct can be used to update Income Streams.

Launch the Process Direct Income and Assets Update workflow. To do this access the customers record in Process Direct Customer Summary,

  • Use Super Key field to navigate to screens
  • Enter START into the Super Key
  • Select Income and Assets Update from the Task Selector options
  • Select Income Streams (SUPS/SUPI/SUPV)
  • Select Start to initiate the workflow

Select add Adding a new line to access Create Income Streams (SUPS/SUPI/SUPV) options.

Code the Income Stream Details:

  • Product Type Code: LPO (Lifetime pooled income stream purchased with non-superannuation money) or LPS (Lifetime pooled income stream purchased with superannuation money)
  • Income stream from SMSF/SAF?: leave blank, self-managed superannuation fund (SMSF) or small APRA fund (SAF) are not able to offer these pooled lifetime products
  • Provider or SMSF/SAF Name:
    • Select the appropriate Provider name from the drop-down list. Beginning to type part of the name will reduce the options. Note: the provider name may not be an exact match to the schedule. If a fund does not appear in the provider/fund name list in the first instance, please refer to FINS Bulletin page Successor Fund Transfer (SFT) page. If still unable to locate, refer to Local Peer Support for support as per normal BAU processes
  • Provider or SMSF/SAF ABN:
    • This will auto-populate. Note: the ABN may not match the schedule
  • Product Name: key name of the income stream product as stated on the schedule. For joint income streams, include the term ‘jointly owned’ to identify the product as a jointly owned income stream
  • Product Reference Number: code the product reference number exactly as it appears on the schedule. The product reference number is unique to each income stream, and may be shown as the product reference number, account number or policy number on the schedule
  • Event Date/Commencement Date: commencement date of the income stream as stated on the schedule. This may vary from the purchase date where the payments from the income stream have been deferred from the date of purchase
  • Purchase Date: purchase date of the income stream as stated on the schedule
  • Term or Relevant Number: the relevant number as stated on the schedule based on the customer’s life expectancy rounded down to the nearest year, as at the assessment day. For reversionary income streams, this is the life expectancy determined on the Assessment Date of the original beneficiary. For joint products, it is the life expectancy of the eldest of the joint beneficiaries

2

Income Stream Details - continued
  • Product Cancellation Reason: leave blank when adding a new income stream
  • Assessment Date: display-only field. The system calculates the date
    • for LPS, as the Purchase Date if over 65, or the earlier of the Commencement Date or reaching 65
    • for LPO, as the Purchase Date if over Age Pension age, or the earlier of the Commencement Date or reaching Age Pension age
  • Threshold Date: display-only field. The date is the later of
    • the day before the customer’s 84th birthday, where the Assessment Day is earlier than 1 January 2025
    • the day before the customer’s 85th birthday, where the Assessment Day is on or from 1 January 2025, or
    • 5 years from the assessment day

For reversionary income streams, this is the Threshold Date determined on the assessment date of the original primary beneficiary

3

Superannuation Payments Details
  • Event Date: when adding a new LPS or LPO income stream, the Event Date will default to the purchase date of the product. An additional event date may have to be inserted for any change after the purchase date, for example, for indexation of payments already commenced
    • Historical coding: Code the Event Date as the date of purchase to avoid getting an error ‘Event Date should be equal to Purchase Date for type LPO’.
    • Leave the Indexation Method blank, indexation is only coded on the most recent/last Event Date to set the future Next Indexation Date
    • Code a new line using the first Event Date assessable, e.g. date of claim
  • Channel Type: the system displays whether the income stream was manually updated by Services Australia staff or auto bulk updated with data sent by the provider (ISP)
  • Gross Income Amount: use the amount and frequency specified on the schedule; do not convert to an annual amount. For joint income streams, multiply the amount shown on the schedule by the percentage held by the customer. If commencement of payments has been deferred, key the income amount as zero at the initial Event Date of the purchase date
  • Income Frequency: select the frequency of payment from the dropdown list

4

Superannuation Payments Details (continued)
  • Initial Purchase Price: amount initially paid for the income stream (not reduced by any commutations). This is the amount of the first (and possibly only) instalment paid, or the sum of all instalments paid on that same day. This amount can be keyed with or without cents. If keyed incorrectly, cancel the product and rekey. For joint income streams, multiply the amount shown on the schedule by the percentage held by the customer
  • Assessable Income Amount: the system calculates and displays the assessable income amount which can be either of the following:
    • If purchased with non-superannuation monies (LPO), the purchase price less any commutations is considered a financial asset and subject to deeming until the assessment day
    • From assessment day, 60% of the gross income amount for either product purchased with superannuation (LPS) and non-superannuation (LPO) monies
  • Assessable Asset Amount field: the system calculates and displays the assessable asset amount when purchased with any of the following:
    • non-superannuation monies (LPO) before assessment day. The assessable amount is 100% of the Purchase Price Less Commutations and the balance is increased annually on the anniversary of the purchase date and any instalments based on upper deeming rate
    • superannuation monies (LPS) before assessment day, there is NIL asset assessable. Note: an income stream purchased with superannuation monies should not be recorded prior to its assessment day
    • for both superannuation and non-superannuation monies on/after assessment day, the assessable amount is the greater of:
      60% of the Purchase Price Less Commutations, or
      100% of the Surrender Value, or
      100% of the Death Benefit if either is above the CAS limits
    • for both superannuation and non-superannuation monies after the Threshold Day, the assessable amount is the greater of:
      30% of the Purchase Price Less Commutations, or
      100% of the Surrender Value, or
      100% of the Death Benefit if either is above the CAS limits
  • Commutation Date: the date of the latest commutation. This date is only for information and is not the date of effect
  • Latest Commutation: the most recent commutation amount
  • Purchase Price less Commutations: the system displays initial purchase price plus the value from Instalment Total field less total commutations (latest commutation plus previous commutations made
  • Previous Commutations: the system displays total commutations coded previously
  • Product Category: after the update is saved the system displays either:
    • Asset-Tested Income Stream (Lifetime)
      LPS – Lifetime pooled income stream (SUP) will always be assessed as Category 10
      LPO – Lifetime pooled income stream (Non-SUP) will be assessed as Category 10 on or after the assessment date
    • Asset-tested Deemed Income Stream (Lifetime)
      LPO - Lifetime pooled income stream (Non-SUP) will be assessed as Category 11 prior to the assessment date

5

Superannuation Payments Details (continued)
  • Indexation Method: if the schedule indicates payment is not indexed, leave Indexation Method, Next Indexation Date and Indexation % fields blank.
    Note: changes in income for pooled lifetime income stream is not dependent solely on indexation of the previous payment. Payment can vary with the returns on investment, age, life expectancy and other factors relevant to mortality. For example, income could be aligned to vary with the Reserve Bank of Australia (RBA) cash rate
  • if payment varies, indexation details must be keyed for a review of the gross income:
    • If 'FIX - Indexed by a fixed % on a fixed date' is selected, the system will auto increase the income amount by the percentage keyed in the Indexation % field on the date specified in the Next Indexation Date field
    • If 'CPI - Consumer Price Index' is selected, the system will send a letter to the income stream owner on the date specified in the Next Indexation Date field requesting their new gross income and frequency of payment. Where payment is variable for any factors other than fixed indexation, ‘CPI’ is to be keyed
  • Next Indexation Date: date as stated on the income stream schedule
    Note: where not otherwise stated in the schedule, or the date on the schedule is in the past, key the next anniversary of the purchase date. This ensures an annual review is generated by the system and updated each year. This field must be keyed with the next future review date when adding the income stream with an indexation method. When multiple updates are required with different Event Dates, only the last entry requires a 'Next Indexation Date' entry to be coded. For example, when coding historical information
  • Indexation Percent: only code if the Indexation Method field is FIX
  • Original Surrender value: the surrender value for the product on the product’s assessment day as advised on the income stream schedule. Code zero if the schedule states the surrender value is zero. Leave this field blank if the product has not reached its assessment date
  • Surrender Value: ONLY KEY if the income stream schedule indicates the surrender value is more than the amount allowed under SIS Regulations Capital Access Schedule, key this field with the amount stated
  • Death Benefit: ONLY KEY if the income stream schedule indicates the death benefit value is more than the amount allowed under SIS Regulations Capital Access Schedule, key this field with the amount stated

6

Pension/Annuities Instalment Details

The Pension/Annuities Instalment Details only needs to be updated if the customer purchased the income stream via instalments.

  • Instalment Date: the date of the instalment payment, as stated on the schedule or advised by the customer. If the assessment day is more than 12 months from the purchase date, or any instalment date, the instalment is automatically increased by the current upper deeming rate on each instalment amount’s anniversary date until the assessment date
  • Amount: amount of each instalment. Each instalment increases by the current upper deeming rate on the anniversary of each payment until the assessment date. The screen will list all the compounded instalment amounts
  • Event Date: the system will auto update this field for the instalment date, and compound on each anniversary and assessment date
  • Channel Type: the system will auto update this field with the source of data update. CSO for any instalment entered by a Service Officer, IDX for automatic compounding on the anniversary and ASS for pro-rata compounding upon assessment day

7

Finalise activity
  • Check the Income Streams (SUPS, SUPI, SUPV) displays the updated income stream details
  • Click Assess
  • Check the payment outcome on Entitlements (ELD) screen and click on Finish
  • If the Service Officer has used the Process Direct Income and Assets workflow, Notes will prepopulate automatically and display for review when Finish is selected
  • At this point any more information can be added, as per Online Document Recorded (ODR)
  • Once Notes are complete, Finalise. The transaction will complete and Notes replicate to the Document List (DL).

If required, ensure FAL screen is checked in Customer First and any review for the return of the documentation completed.