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Lock in Unrestricted non-preserved benefits

Discussion in 'Superannuation, SMSF & Personal Insurance' started by netd, 26th Jun, 2012.

  1. netd

    netd Member

    15th Jun, 2012
    Sydney, NSW

    I thought this may be beneficial to some people.

    I recently found this;
    ATO Definitions

    "Unrestricted non-preserved benefits

    These are generally benefits which the member has previously met a
    condition of release and was entitled to be paid but has voluntarily
    decided to keep within the superannuation system. There are no
    restrictions for paying these superannuation benefits out to a member
    at any time on demand, irrespective of age, employment situation or
    financial position, providing the superannuation fund rules allow the

    I called them and they confirmed that for a SMSF once a member has met a condition of release (for example: reached preservation age, currently 55, & no longer intends to work) all their funds can be classified Unrestricted non-preserved benefits (all income earned by these funds will also be Unrestricted non-preserved benefits) and these funds can be accessed at any time in the future, even if things change and the member starts working again.

    I rang two industry funds, one would do it and the other would not (possibly due to their charter?).
  2. Superman

    Superman Well-Known Member

    6th Nov, 2007
    Gold Coast, QLD
    Thank you for sharing.

    This is important for people pre-retirement (i.e. 55 to 65)

    Advisers often focus on running multiple pensions based on the taxable / tax-free components, but it can also be done with the preserved versus unrestricted non-preserved components.

    This is important when a member commences a TRIS, as if the unrestricted non-preserved component is kept in a separate pension, they have 100% access to those funds, plus up to 10% per year from any pension made up of preserved components.

    If everything is mushed into one pension account, the unrestricted non-preserved portion HAS TO BE DRAWN FIRST - so you can have circumstances where an individual commences a TRIS at 55, and unknowingly depletes their unrestricted non-preserved component, then needs a large amount of cash and can't access enough if they haven't triggered another condition of release.

    SMSF pensions are so much fun! I spend a lot of time training my staff on how best to set up and maintain pension accounts, and this reminds me they need a refresher as we always are guilty of focussing on the tax components.

    SM ;)