The ATO have provided important updated guidance for recipients of Market-Linked Pensions (MLP) as a result of an unintended consequence in the legislation that provides a nil value on commutation of the capped defined benefit income stream.
In some instances, members have commuted the MLP within a SMSF post 1 July 2017 for transfer balance cap (TBC) purposes to re-purchase the pension using the purchase price of the income stream (reducing the value on the member’s TBC).
Treasury will amend the law to fix this issue and the ATO will not apply compliance resources to target the double-counting on such pensions.
For more information, see the ATO news alert, https://www.ato.gov.au/…/3–advice-for-funds-where-members…/
