Defined Benefit pensions & $1.6m limits - questions?

Discussion in 'Superannuation, SMSF & Personal Insurance' started by qak, 4th Jun, 2019.

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  1. qak

    qak Well-Known Member

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    If you will become entitled to a defined benefit (DB) pension when you retire (but you have not retired yet), and the estimated value of just that future DB pension using the x16 formula is more than the $1.6m Total Super Balance cap, can you make non-concessional contributions now (subject of course to all the other limits and restrictions).

    I'm trying to get my head around how this works. As far as I can tell the DB pension is only valued for TSB when you become entitled to it (ie, usually at retirement), is that correct? Seems very generous for parliamentarians and public servants (who I think would be the most likely to receive a DB pension these days)!

    Then in the future, if the DB pensioner dies, and the DB pension reverts to their spouse at 2/3 of the original DB pension, is the spouse assessed on the original pension amount, the 2/3, or nothing (since it's already been counted)?
     
  2. qak

    qak Well-Known Member

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    And another one for the super gurus out there:

    Is there any case where a DB pension over $100K does not have the amount over $100K taxed?

    I'm finding references to capped defined benefit income streams, and that they include "Lifetime pensions are often provided to Commonwealth, State and Territory public office holders, and military and civilian employees"
    Capped defined benefit income streams
    but can't work out when a defined benefit pension excess might not be taxable? I've only come across ComSuper type pensions where there's a rebate, but that was before the 2017 changes.
     
  3. SatayKing

    SatayKing Well-Known Member

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    This could be a starting point @qak

    Transfer balance cap

    I haven't looked into it much at all as I have no need to.
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Speak to the fund and get personal financial advice. This issue is complex and need planning. If you have non DB super (or spouse) the issues are even more complex.