For super members currently trapped in market linked pensions and who wish to cash out or transfer the pension to an account based pension – now is the time to take action.

As market linked pensions are a special form of account pensions, they can be readily commuted with the commutation amount simply being the balance of the pension account. This balance once rolled over – internally to another account in the super fund or externally to another super fund (or even rolled over to your personal bank account). Given that anyone currently in a market linked pension must be aged 65 or more, the rollover or cash out will have no tax implications for the member - the rollover amount is simply a tax free super payment.

While liberation from the tyranny of a market linked pension is relatively easily achieved as:

The Superannuation Industry Regulations have been amended to permit commutations.

The SUPERCentral Governing Rules have been amended to permit such commutations (if the SMSF is not currently on SUPERCentral, the trust deed can be easily amended to permit such contributions).

The only missing elements are the Member Request and the Trustee Commutation & Rollover/Cashing Out Resolutions.

However, there are three matters to consider.

First – before the commutation can occur, sufficient pension payments must be made to satisfy the minimum pension drawdown requirement.

Second – if the market linked pension is assets test exempt, then this asset test exemption will be lost on the commutation and the pension account will then be subject on a prospective basis, to the Centrelink assets test and the Centrelink income test.

Lastly, the Summer of Pension Liberation will abruptly end on 7 December 2029 (being the end of the 5 year commutation window permitted by the regulations).

For those super members suffering in the Winter of Discontented Market Linked Pensions, now is the very extended Summer made glorious by Pension Reform