Definition of capped defined benefit pensions expanded


Monday 08 May 2017

The Government has released an exposure draft of regulations to expand the range of capped defined benefit income streams that are subject to special treatment under the transfer balance cap.

Capped defined benefit income streams are subject to modified income tax and valuation rules for the purposes of the transfer balance cap.

The draft regulations expand the definition of capped defined benefit income streams to cover defined benefit pensions that allow commutations or are subject to other restrictions that fall outside the scope of the superannuation regulations. Invalidity pensions paid through certain Government superannuation schemes will be included in the expanded definition of capped defined benefit income stream.

The amount, or special value, of these pensions that will be counted towards an individual’s transfer balance account will be calculated by multiplying the annual entitlement by a factor of 16.

Submissions on the exposure draft closed on 4 May 2017.

Further information

Treasury, Expanding the range of capped defined benefit income streams, 13 April 2017

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