Why does an SMSF need an actuary certificate?

November 30, 2011

An actuary certificate is a document which is required when a person gets superannuated. More so if the superannuation fund is also providing a pension every month. SMSF or the Self Managed Superannuation Fund requires these certificates as they prepare to pay for the retirement benefits of an individual.

An SMSF requires the actuary certificate when

• One needs to file for exemption of tax according to the Income Tax Assessment Act 1936. The purpose of the actuary is to enable a person to decide what sum or portion of the entire earning can be exempted from tax. The truth is that the portion of the income which is derived from the pension is tax exempted.

• According to the Superannuation Industry Supervision Regulations 1994 for adequacy, for all those Self Managed Superannuation Funds who provide its customers some more benefits as compared to regular pensions, the submission of an actuary certificate is a yearly procedure and a must.

An actuary certificate is to provide correct information on the activities of the people who are retired from their jobs and is about to get pension. A point to keep in mind is that funds in losses do not require such a certificate.

Actuarial certificate – Exempt Current Pension Income (ECPI).

October 31, 2011

A Self managed super fund can claim exemption from paying tax on income from those assets (pension assets) which are supporting an income stream, such as account based pension being paid to a member of the fund. This income is called the Exempt Current Pension Income (ECPI). If pension paying assets are segregated from non-pension paying assets then there is no need to obtain an actuarial certificate. Sometimes, some of the pension assets are segregated and the remaining pension assets are mixed with non-pension assets. For example one bank account is set aside for a pensioner, in this situation actuarial certificate is required only for assets that are un-segregated (mixed) and segregated assets are not included in the calculation as all income of the segregated assets is 100% tax exempt.

A self managed super fund requires an actuarial certificate for each year when the pension assets are un-segregated