Reviewing actuarial certificates for lifetime or life expectancy asset test exempt income streams from Self Managed or Small APRA Super Funds 110-02060050

A request for a new actuarial certificate is part of the August income stream review. All actuarial certificate reviews are conducted in August of each year.

Customers and/or their partners are requested to provide new actuarial certificates by 31 December. A reminder request is sent mid-November.

If the new actuarial certificate is not supplied by 31 December, customers and/or their partners are provided additional 3 weeks, that is, until 21 January to supply the information. No advice of this additional time is sent to the customer or their partner. If the new actuarial certificate is not supplied by 21 January or the certification date is after 31 December, the income stream will lose its asset-test exemption from 1 January.

The new actuarial certificate must meet certain requirements.

If a customer has:

• provided a new actuarial certificate by 21 January, go to Step 2
• not provided a new actuarial certificate by 21 January, go to Step 5
• not taken the required action by the end of the restructure period of up to 12 weeks, go to Step 7
• fully commuted the income stream and rolled the proceeds into a new income stream within the restructure period, see Step 1 in the Investigating proceeds of the commutation and finalising the activity table

Is the certification date of the new actuarial certificate before 1 January?

• Yes, go to Step 3
• No, go to Step 5

Check if the new actuarial certificate expresses a 'high probability' opinion about the income stream.

Ensure product details such as commencement date, original purchase price, gross income amount, indexation details, etc. have not been amended since commencement date. Also ensure a partial commutation has not been made as this could be a non-allowable commutation.

Note: the addition of funds (by, for example, topping up the income stream) or use of funds from outside the income stream (for example, to meet administrative expenses) or reduction of income payments to meet the high probability requirements, are not permissible. If this occurs, the income stream will lose ATE status and should be cancelled and re-coded as a non-complying income stream from date of provision of actuarial certificate to Services Australia.

Does the new certificate express a 'high probability' opinion about the income stream?

• Yes, go to Step 4
• No, go to Step 6

• Select the income stream review (SAL review) from Activity List (AL) screen and go to the Pension/Annuities Summary (SUPS) screen
• 'S'elect the appropriate product line and press [Enter]
• The Pension/Annuities Identification (SUPI) screen will display. Check correct product is selected and press [Enter]
• On the Pension/Annuities Details Variable (SUPV) screen, re-code the new actuarial certificate date (start date of the in force period) in the SMSF/SAF Actuarial Cert Date: field. Note: the actuarial certificate date must be coded as 1 July of the current financial year
• If a review activity XXX/SUP SAL with keyword BTH is taken to the Assessment Results (AR) screen after only updating the Actuarial Certificate information:
• The Assessment Warning and Error (AWE) screen will display ACCTBAS not updated, a new SAL/SUP review will auto generate on FAL
• Check the customer's record for scanned account based information. If the certificate has been scanned, there may be a relevant scanning (SCN) activity on the AL screen
• If the Account Based information has been received, update the details as part of the review
• If the Account Based information has not been received, finalise the review. Another review activity with the keyword ACCTBAS will automatically generate on the Future Activity List (FAL) screen as the required Account Based information has not been updated
• Record the outcome of the review on a DOC

Procedure ends here.

A Manual Follow-up (MFU) with a keyword 'INCSTRM6' is created if a new certificate is not provided by 31 December. An additional three weeks from 31 December is given only for the provision of the certificate to take into account any delays during the Christmas period. The certification date cannot be after 31 December.

Note: the MFU may be incorrectly created if the information returned has not been attached to the appropriate review activity. Check the customer's record for scanned documents and/or the Document List (DL) screen to see if the certificate has been provided. Customers who complete their review online are able to lodge their actuarial certificate via Upload documents and the document will appear on the customer's record as a scanned image.

The customer’s original income stream has to be cancelled and re-coded as non-complying from 1 January.

Send a Free text (Q999) letter notifying the customer about the income stream's loss of ATE status from 1 January for non-provision of actuarial certificate.

Cancel the income stream and record it as 'Section 9A/9B non compliant' (that is, asset tested)

'S'elect the MFU activity from the AL screen and go to the SUPS screen.

'S'elect the appropriate product line and press [Enter] for the SUPI screen to display.

On the SUPI screen, update the Product Cancellation Reason: field with the cancellation reason 'OTH' and press [Enter]. The screen will flow to the SUPV screen.

On the SUPV screen, code the Event Date: field as 1 January and press [Enter].

Re-code the same income stream again duplicating the information on the cancelled record except for the following:

• On the SUPI screen, code the SMSF/SAF Actuarial Cert Provided: field with 'N' and code the Section 9/A/B/BA Compliant Indicator: field with 'N'
• On the corresponding SUPV screen, code the Event Date: field as the date of cancellation of the cancelled record, that is, 1 January. For assistance, see:
• Adding or updating a life expectancy income stream, or
• Adding or updating a lifetime income stream

Finalise the activity on the AR screen and complete the MFU.

Record details on a DOC.

Procedure ends here.

The customer should be given a restructure period of up to 12 weeks from the date of provision of the new certificate to Services Australia to commute the income stream and rollover to a new appropriate ATE income stream for retaining the asset-test exemption.

The customer should be formally notified about the 12 week restructure period and the option to restructure the income stream and the consequences of not restructuring.

The 12 week period can be extended to 18 weeks if:

• the customer has taken all steps to restructure their original ATE income stream within 12 weeks, and
• for reasons outside their control, the new income stream has not commenced within the 12 weeks

The commutation of original ATE income streams sourced from SMSFs and SAFs and rollover to a new ATE income stream is restricted to certain types of income streams only.

The original income stream will continue to be asset-test exempt until the end of the restructure period or until restructured whichever is earlier.

Note: if the actuarial certificate has been received by mail, the Records Management Unit (RMU) will scan the certificate which will automatically select the review from the FAL screen only if the certificate is attached to the covering letter. The review will then display on the AL screen. Otherwise, there will be a relevant scanning (SCN) activity on the AL screen. The outstanding review on the AL screen has to be placed on hold until the end of the 12 week restructure period.

Scanned images can be accessed from Document Tools in Customer First. For assistance see, Locating digital images.

Update the review:

• If the review activity is not on the AL screen, select the income stream review from the FAL screen. The AL screen will display
• Go to the SUPS screen. 'S'elect the appropriate product line and the SUPI screen will display. Check correct product is selected and press [Enter]
• On the SUPV screen, re-code the new actuarial certificate start date of the in-force period (1 July of the current financial year) in the SMSF/SAF Actuarial Cert Date: field
• Finalise the review and in Customer First, create a new manual review on the Review Registration (RVR) screen and complete the fields as follows:
• Service Reason: customer's payment type
• Review Reason: select most appropriate reason
• Due Date: end of the 12 week restructure period
• Source: INT
• Date of Receipt: today's date
• Notes: 'End of 12 week restructure period. Refer to OB 110-02060050.'
• Keywords: ACTUARL
• Workgroup: leave blank
• Position: leave blank
• Transfer to Region: leave blank
• The review will mature on the Due Date coded in the RVR activity. Workload Management will allocate the review for manual action

Record the details of the assessment on a DOC.

Procedure ends here.

The 12 week period can be extended to 18 weeks if:

• the customer has taken all steps to restructure their original ATE income stream within 12 weeks, and
• for reasons outside their control, the new income stream has not commenced within the 12 weeks

The income stream will lose its ATE status from the date the actuarial certificate is provided if:

• no action is taken
• the new ATE lifetime or life expectancy income stream is not purchased, or
• if an asset-tested MLI is purchased

The income stream must be manually reassessed as an asset-tested income stream:

• Cancel the product
• Re-coding it as a non-complying income stream from this date
• Any debt resulting from the reassessment of the income stream as asset-tested has to be raised and recovered.

At the end of the 12 week restructure period or at the end of the 18 week restructure period if an extension is granted

Select the income stream review which is on hold from the AL screen and go to the SUPS screen.

'S'elect the appropriate product line and press [Enter] for the SUPI screen to display.

On the SUPI screen, update the Product Cancellation Reason: field with the cancellation reason 'OTH' and press [Enter]. The screen will flow to the SUPV screen.

On the SUPV screen, code the Event Date: field as the date of the expiry of the grace period and press [Enter].

Re-code the same income stream again duplicating the information on the cancelled record except for the following:

• On the SUPI screen, code the SMSF/SAF Actuarial Cert Provided: field with 'N' and code the Section 9/A/B/BA Compliant Indicator: field with 'N'
• On the corresponding SUPV screen, code the Event Date: field as the date of cancellation of the cancelled record. For assistance, see:
• Adding or updating a life expectancy income stream , or
• Adding or updating a lifetime income stream
• Finalise the activity on the AR screen
• Record details on a DOC

Did the customer roll the proceeds of the commutation to an asset-tested market-linked income stream (MLI) under the debt waiver provisions?

Note: if the original income stream is a 50% ATE income stream, it can be fully commuted and rolled over to a 50% ATE MLI from the SMSF or SAF or from a retail provider to retain asset-test exemption.

• Yes, go to Step 2
• No, go to Step 3

Proceeds of the commutation rolled to an asset-tested MLI under the debt waiver provisions.

The original income stream loses its ATE status from the date of provision of actuarial certificate and the income stream must be manually reassessed as an asset-tested income stream by cancelling the product and re-coding it as a non-complying income stream from this date. Any resulting debt must be raised and waived under the debt waiver provisions.

• Cancel the original income stream and code the new asset-tested MLI. For coding assistance, see Commutation of asset-test exempt (ATE) income streams
• Refer to the Debt team for debt to be manually calculated, raised and waived
• Finalise the review set for the end of the restructure period and complete the MFU
• Record details of the assessment on a DOC

Procedure ends here.

The customer can commute the income stream and rollover to a new appropriate ATE income stream for retaining the asset-test exemption. See Commutation of asset-test exempt (ATE) income streams.

Did the customer roll the proceeds of the commutation into a new asset-test exempt (ATE) income stream?

• Yes, go to Step 4
• No, go to Step 5

• Cancel the original income stream and code the new asset-test exempt income stream. For coding assistance, see Commutation of asset-test exempt (ATE) income streams
• Finalise the review set for the end of the restructure period and complete the MFU
• Record details of the assessment on a DOC

Procedure ends here.

The proceeds of the commutation have been used to purchase a new income stream that is not an asset-test exempt (ATE) income stream or does not meet the requirements of the debt waiver provisions.

This would be a non-allowable commutation. See Commutation of asset-test exempt (ATE) income streams.

Finalise the review set for the end of the restructure period and complete the MFU.

Record details of the assessment on a DOC.