29/06/2016

While starting a pension sounds straightforward, it’s important for trustees not to forget the compliance requirements that come with setting up a pension.

The three main mistakes that we see from clients are:
-    not checking that the trust deed allows the trustee to issue the requested type of pension and that it can do so on the member’s proposed terms;
-    not checking that the member is entitled under the trust deed to receive payment of their benefit as the requested type of pension (e.g. transition to retirement); and
-    not having the proper documentation prepared.  

The need for pension documentation is often overlooked. However, for compliance purposes, it is important to ensure the terms of the pension as agreed between the member and the trustee are set out in writing (e.g. start date and initial account balance of pension; tax free and taxable components, nomination of a reversionary beneficiary, frequency of payment, etc).   

Any other requirements of the trust deed must also be complied with.

If you do not have any documentation supporting the issue of a pension, you can order our pension documents package regardless of whether the pension has commenced or not. For funds which are not governed by the SUPERCentral Governing Rules, our service includes a review of the trust deed to confirm the trustee’s power and member’s entitlement.

For further information, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.