Class Super release addresses latest industry challenge for SMSF pensions
Monday, 2 July 2018 – Exempt Current Pension Income (ECPI) calculations just got a lot harder for anyone not using specialised software like Class Super.
Class has released key updates to streamline the new ATO guidelines around claiming ECPI for the 2017-18 income year onwards.
The new ATO guidelines significantly change the current industry practice of how ECPI is calculated across a financial year.
For the financial year ended on 30 June 2018 onwards, a fund must use both the segregated method (for the period while it is in 100% pension phase), and the unsegregated method (for any periods where it is in a mix of both pension and accumulation phase). The ECPI percentage must only be applied to income and expenses falling within the unsegregated periods i.e. actuarial certificates now only cover the periods where there are unsegregated assets in the fund.
The previous approach was to apply either the segregated or unsegregated method across an entire year.
The new guidelines mean that trustees now have additional record keeping requirements, and potentially need to keep track of several accounting periods in a year to claim ECPI correctly. This new approach needs more data to perform the calculations and is more difficult to apply.
The actuaries who perform the ECPI calculations have worked together to define a new data standard. In this latest release, Class Super has updated period update algorithms, ECPI calculations, and now supports the new data standard for integrated actuarial certificate providers.
Kevin Bungard, CEO of Class, explains: “It is critical that administrators and the trustees of funds with pensions understand the new rules and apply the ECPI percentage correctly. It is hard to see how funds being administered manually will meet the new requirements, especially on top of all the other Super Reform obligations.
“The latest updates to Class Super automate the tracking, calculation and application of ECPI, delivering considerable time savings and allow trustees to remain compliant with the new guidelines.”