Updates to Legacy Retirement Products and SMSFs

Recent legislative changes now allow individuals to exit certain legacy retirement products over a five-year period, starting from 7 December 2024.

These updates apply to legacy retirement products held with any superannuation provider, including APRA-regulated super funds and self-managed super funds (SMSFs).

Eligibility for Exiting Legacy Retirement Products

Members can exit eligible legacy retirement products, subject to their fund’s trust deed, if the following criteria are met:

• The product generally commenced prior to 20 September 2007 or resulted from a conversion of an earlier legacy product that began before this date.
• It is a superannuation income stream product classified as one of the following:
  • Lifetime pension or annuity (excluding those paid from defined benefit funds in large APRA-regulated super funds).
  • Life expectancy pension or annuity.
  • Market-linked pension or annuity.

Impact on Reserve Allocations and Contribution Caps

The changes also affect how allocations from reserves are treated for contribution cap purposes, potentially influencing SMSF strategies.

Next Steps for SMSF Trustees and Members

If you hold or manage legacy retirement products, now is the time to review these updates and assess their potential impact. Consult with your financial advisor or SMSF specialist to ensure compliance and explore the opportunities created by these changes.

For further assistance, contact our team today!