Converting member accounts

By law, members of self-managed superannuation funds may be permitted (depending on age and employment status) to have accounts in accumulation phase, pension phase or transition to retirement phase.

When setting up members, you will have set up at least one account for each member, and potentially several different accounts, and defined each as one of these three possible types:

Due to a change in employment status, and/or upon reaching a qualifying age, a member may opt to convert an account from one type to another.

Mclowd supports the periodic computation of relevant account balances and the transfer of part (or all) of the balance to an account of a different type.

For example, a member reaching retirement age and ceasing work may wish to convert his or her Accumulation Account to a Pension Account and start receiving regular pension payments from the Fund.

This article details the correct procedure for converting member accounts.

For information regarding qualifications to hold/convert to a specific account type, please refer to relevant documentation on the Australian Securities and Investment Fund or Australian Taxation Office websites, or speak with a professional adviser.

The Legal Considerations section of this volume provides brief summary of current legislation (as at January 2018). Trustees should not rely on this summary. There may be serious legal implications if an account is wrongly converted and professional advice is essential.

Be aware that account conversion requires certain documentation. The converting member should write to the Fund making a formal request and detailing, as far as they are able, their investigation of the legal requirements and how they comply, and noting whether they wish to transfer the full, or only part, of their existing account balance.

The Trustees should verify that the member is qualified to make the requested conversion and record a Minute in the Fund’s records verifying that appropriate investigations were made and that the conversion was deemed to comply with legislative guidelines. They should also record how and when the transfer was performed. Seek professional assistance with this process if necessary. There are serious legal implications for Fund Trustees failing to create and retain required records.

Note: Templates of the required legal documents can be found under the More tab.