A technical issue which impacts Reversionary Transition to Retirement Income Streams (TRISs) is being corrected with a bill which has now passed both houses of parliament.
The bill, Treasury Laws Amendment (2018 Measures No.4) Bill 2018, contained a solution to ensure that TRISs can be paid to a reversionary beneficiary, regardless of whether they have satisfied a condition of release.
The explanatory memorandum materials explained that, due to the “interaction between the specific ‘retirement phase’ definition that applies to TRISs and the requirement in regulation 6.21 of the SIS Regs that death benefits can only be paid through a superannuation income stream that is in the retirement phase” currently a TRIS can only revert to a reversionary beneficiary if that beneficiary has satisfied a condition of release.
The change included in the bill will negate the need for a TRIS to be commuted to accumulation and a new income stream to be started for the beneficiary and will instead allow for a smooth reversionary transition, by altering the rules around when a TRIS is considered to be in retirement phase.
The change largely applies from 1 July 2017, so any payments of TRIS pensions to reversionary beneficiaries which have occurred since that date would not result in a contravention of SIS Regulation 6.21.
If you have any questions or would like further information on how this change may impact your clients, please feel free to contact us on 1800 24 23 22.