(d) the capital value of the pension and the income from it cannot be used as a security for a borrowing.
(9B) Rules for the provision of a benefit do not meet the standards of any of subregulations (2) to (9A) if, in relation to the death of the beneficiary on or after 1 July 2007, the pension is transferred or paid to a person who would not be eligible to be paid a benefit in the form of a pension under paragraph 6.21(2)(b) or subregulation 6.21(2A) or (2B).
(9C) If a pension is paid from a successor fund in accordance with rules to which subparagraph (9A)(b)(iv) applied in the original fund, the pension meets the standards of subregulation (9A).
(10) Despite section 7 of the Income Tax Assessment (1936 Act) Regulations 2025, for a pension that has a commencement day on or after 20 September 2004 and on or before 31 December 2004, one of the following life tables are to be used in ascertaining the life expectancy of a person under this regulation:
(a) the most recently published Australian Life Tables;
(b) the 1995‑97 Australian Life Tables.
(11) In this regulation:
indexation arrangement, in relation to a pension, means an arrangement specified in the rules for the provision of the pension that:
(a) results in the total amount of pension payments in each year:
(i) increasing by the same percentage factor; or
(ii) being adjusted in line with movements in the Consumer Price Index; or
(iii) being adjusted in line with movements in an index of average weekly earnings published by the Australian Statistician; or
(iv) being adjusted in accordance with subparagraph (ii) or (iii) but with an increase capped at a maximum level; and
(b) ensures that, unless APRA otherwise approves, an adjustment is made at least annually to the amount of the pension payments.
1.06A Standards for certain innovative superannuation income streams
(1) This regulation applies to either of the following (the governing conditions):
(a) a contract for the provision of a benefit supported by a superannuation interest (within the meaning of the 1997 Tax Act);
(b) the rules for the provision of a benefit supported by a superannuation interest (within the meaning of that Act).
(2) The governing conditions meet the standards of this subregulation if:
(a) they neither meet the standards in subregulation 1.05(11A) nor the standards in subregulation 1.06(9A) (as applicable); and
(b) they comply with subregulation (3) of this regulation; and
(c) either:
(i) they ensure that payment of the benefit is made at least annually; or
(ii) the benefit is a deferred superannuation income stream.
Note: Paragraph (a) can be complied with for some of the standards referred to in that paragraph if the governing conditions state that they do not meet those standards (see subregulation (5)).
(3) The governing conditions comply with this subregulation if they ensure that:
(a) no payment of the benefit is made before the primary beneficiary satisfies a condition of release mentioned in item 101, 102, 102A, 103 or 106 of Schedule 1; and
(b) after payments of the benefit start, the benefit is payable throughout the life of the beneficiary (primary or reversionary); and
(c) the amount of benefit payments is determined using a method that ensures that those payments are not unreasonably deferred after they start, having regard to the following:
(i) to the extent that the payments depend on the returns on investment of the assets supporting the benefit—when the payments are made and when the returns are derived;
(ii) to the extent that the payments depend on the ages, life expectancies or other factors relevant to the mortality of other individuals who are beneficiaries of that kind of benefit—the age, life expectancy or other factors relevant to the mortality of each of those other individuals;
(iii) to the extent that the payments do not depend on the returns mentioned in subparagraph (i) or the ages, life expectancies or other factors relevant to mortality mentioned in subparagraph (ii)—the relative sizes of the annual totals of the payments from year to year;
(iv) any other relevant factors; and
(d) if the benefit is commuted on or after the retirement phase start day for the benefit—the commutation amount does not exceed the amount worked out for the benefit under regulation 1.06B; and
(e) if the benefit is commuted before the retirement phase start day for the benefit—the commutation happens only in accordance with the rules set out in regulations 6.16, 6.18, 6.19 and 6.22A, if those rules applied in relation to the benefit as if:
(i) the benefit were in a regulated superannuation fund; and
(ii) the beneficiary were a member of the fund; and
(iii) the provider of the benefit were a trustee of the fund; and
(f) the benefit is transferable to another person only on the death of the beneficiary (primary or reversionary, as applicable); and
(g) the capital value of the benefit and the income from it cannot be used as a security for a borrowing.
(4) However, the governing conditions do not meet the standards of subregulation (2) if, in relation to the death of the beneficiary, the benefit is transferred or paid to a person who would not be eligible under paragraph 6.21(2)(b), or under subregulation 6.21(2A) or (2B), to be paid a benefit.
(5) The governing conditions may state that they do not meet the standards in subparagraph 1.05(11A)(b)(i) or (ii), or in subparagraph 1.06(9A)(b)(i) or (ii), as applicable. For the purposes of this Part, such a statement has effect according to its terms from the day it is made, and continues to have effect whether or not the statement is later changed or removed.
1.06B Maximum commutation amount for certain innovative superannuation income streams
(1) For the purposes of paragraph 1.06A(3)(d), the amount for a commutation of a benefit (the income stream) is:
(a) if the income stream is commuted during the 14 day period starting on the retirement phase start day for the income stream—the access amount for the income stream at the time of the commutation; or
(b) if the income stream is commuted on the death of the beneficiary within the first half of the life expectancy period for the income stream and paragraph (a) does not apply—the access amount for the income stream at the time of the death; or
(c) otherwise:
(i) the amount worked out for the income stream under subregulation (2); or
(ii) if the amount worked out for the income stream under subregulation (2) is less than or equal to zero—nil.
(2) For the purposes of paragraph (1)(c), the amount for the income stream is worked out using the following formula:
Start formula open bracket start fraction Access amount for the income stream at the time of the commutation over Life expectancy period for the income stream end fraction times Remaining life expectancy close bracket minus Previously commuted amount end formula
where:
previously commuted amount means the sum of any amounts commuted from the income stream before the time of the commutation.
remaining life expectancy means the number of days remaining in the life expectancy period for the income stream after subtracting the number of days in the period:
(a) starting on the retirement phase start day for the income stream; and
(b) ending on the day of the commutation.
1.06C Limited period for full commutation of certain income streams
(1) For the purposes of subparagraphs 1.06(2)(e)(iiia), (7)(g)(va) and (8)(d)(iva), this subregulation applies to a commutation of a benefit if:
(a) the benefit is commuted during the 5 years beginning on the day this regulation commences; and
(b) the whole of the benefit is commuted.
(2) For the purposes of subparagraph 1.06(2)(e)(iiia), this subregulation applies to a commutation of a benefit if the fund providing the benefit:
(a) is not a defined benefit fund; or
(b) is a self managed superannuation fund; or
(c) was, when the benefit commenced to be paid and at all earlier times, a small APRA fund (within the meaning of the Corporations Act 2001).
1.07 Periods when beneficiary may not receive benefits
A benefit is not taken not to meet the standards in regulation 1.05 or 1.06 by reason only that payments of benefit to the beneficiary have been properly suspended during a period when the beneficiary is the holder of a paid public office.
1.07A Commutation of allocated annuities and pensions
(1) This regulation applies in relation to the following:
(a) a contract mentioned in paragraph 1.05(1A)(e) for a benefit (in this regulation called the annuity);
(b) a contract mentioned in paragraph 1.05(1A)(g) for a benefit that is an annuity under sub‑subparagraph 1.05(1A)(g)(i)(A) (in this regulation called the annuity);
(c) rules of a superannuation fund mentioned in paragraph 1.06(1A)(c) for a benefit (in this regulation called the pension).
(2) The contract or rules, meet the standards of this regulation if the contract or rules ensure that the annuity or pension cannot be commuted, in whole or in part, unless:
(a) the commutation results from the death of an annuitant or pensioner or a reversionary annuitant or reversionary pensioner; or
(b) the sole purpose of the commutation is:
(i) to pay a superannuation contributions surcharge; or
(ii) to give effect to an entitlement of a non‑member spouse under a payment split; or
(iii) to meet the rights of a client to return a financial product under Division 5 of Part 7.9 of the Corporations Act 2001; or
(ba) for a commutation in part—the account balance of the annuity or pension, immediately after the commutation in part, would be equal to or would exceed the minimum limit under Schedule 1A or Schedule 1AAB, whichever is applicable to the annuity or pension under subregulation 1.05(4) or 1.06(4) as the case may be, as reduced by the amount of payments (excluding amounts paid by way of commutation) to the annuitant or pensioner already made in the financial year in which the commutation in part would occur; or
(c) the annuity or pension has paid, in the financial year in which the commutation is to take place, at least the minimum amount under subregulation (3).
(3) For paragraph (2)(c), the minimum amount is calculated using the formula:
Start formula Minimum annual amount times start fraction Days in payment period over Days in financial year end fraction end formula
where:
Days in payment period means the number of days in the period that:
(a) begins on:
(i) if the annuity or pension commenced in the financial year in which the commutation is to take place—the commencement day; or
(ii) otherwise—1 July in that financial year; and
(b) ends on the day on which the commutation is to take place.
Days in financial year means the number of days in the financial year in which the commutation is to take place (365 or 366).
Minimum annual amount for the financial year means:
(a) for an annuity mentioned in paragraph (1)(b)—the minimum limit worked out in accordance with clause 2 of Schedule 1A or 1AAB as the case may be, as if the annuity account balance was the amount of the annuity account that is allocated by the annuity provider to make payments whose size is not fixed, in accordance with subparagraph 1.05(8)(c)(ii); and
(b) otherwise—the minimum limit worked out in accordance with clause 2 of Schedule 1A or 1AAB as the case may be;
rounded to the nearest 10 whole dollars.
1.07B Commutation of other annuities and pensions
(1) This regulation applies in relation to the following:
(a) a contract mentioned in paragraph 1.05(1)(e), (1A)(f) or (1B)(c) for a benefit (the annuity);
(b) a contract mentioned in paragraph 1.05(1A)(g) for a benefit that is an annuity under sub‑subparagraph 1.05(1A)(g)(i)(B) (the annuity);
(c) rules of a superannuation fund mentioned in paragraph 1.06(1)(c), (1A)(d) or (1B)(c) for a benefit (the pension).
(2) For this regulation, other than for subregulation (5), the payment year for an annuity or pension means the period of 12 months that begins on the day after:
(a) the commencement day; or
(b) the anniversary of the commencement day.
(3) The contract or rules, meet the standards of this regulation if the contract or rules ensure that the annuity or pension cannot be commuted, in whole or in part, unless:
(a) the commutation results from the death of an annuitant or pensioner or a reversionary annuitant or reversionary pensioner; or
(b) the sole purpose of the commutation is:
(i) to pay a superannuation contributions surcharge; or
(ii) to give effect to an entitlement of a non‑member spouse under a payment split; or
(iii) to meet the rights of a client to return a financial product under Division 5 of Part 7.9 of the Corporations Act 2001; or
(iv) to comply with section 136‑80 in Schedule 1 to the Taxation Administration Act 1953; or
(c) the annuity or pension has paid, in the payment year in which the commutation is to take place, at least the minimum amount under subregulation (4).
(4) For paragraph (3)(c), the minimum amount is calculated using the formula:
Start formula Minimum annual amount times start fraction Days in payment period over Days in payment year end fraction end formula
where:
Days in payment period means:
(a) the number of days in the period that:
(i) begins on:
(A) the day after the anniversary of the commencement day that occurs before the day on which the commutation is to take place; or
(B) if the annuity or pension commenced on the day before the start of the payment year in which the commutation is to take place—the day after the commencement day; and
(ii) ends on the day on which the commutation is to take place; or
(b) if subregulation (5) applies—1 day.
Days in payment year means the number of days in the payment year in which the commutation is to take place (365 or 366).
Minimum annual amount means:
(a) for an annuity mentioned in paragraph (1)(b)—the minimum amount that the annuity would pay as fixed‑size payments in the payment year if the annuity were not commuted; and
(b) otherwise—the minimum amount that the annuity or pension would pay in the payment year if the annuity or pension were not commuted.
(5) If the commencement day for an annuity or a pension is the day on which the commutation of the annuity or pension is to take place:
(a) the payment year is taken to commence on the commencement day and end on the day before the anniversary of the commencement day; and
(b) there is taken to be 1 day in the payment period.
(6) If, to calculate the minimum annual amount, it is necessary to use a future unknown value of the CPI, that value is taken to be equal to the CPI for the last known quarter.
1.07C Commutation of market linked income stream
(1) This regulation applies in relation to the following:
(a) a contract mentioned in paragraph 1.05(1A)(h) or (1B)(d) for a market linked annuity;
(b) rules of a superannuation fund mentioned in paragraph 1.06(1A)(e) or (1B)(d) for a market linked pension.
(2) The contract or rules meet the standards of this regulation if the contract or rules ensure that the annuity or pension cannot be commuted, in whole or in part, unless:
(a) the commutation results from the death of an annuitant or pensioner or a reversionary annuitant or reversionary pensioner; or
(b) the sole purpose of the commutation is:
(i) to pay a superannuation contributions surcharge; or
(ii) to give effect to an entitlement of a non‑member spouse under a payment split; or
(iii) to meet the rights of a client to return a financial product under Division 5 of Part 7.9 of the Corporations Act 2001; or
(iv) to comply with section 136‑80 in Schedule 1 to the Taxation Administration Act 1953; or
(ba) for a commutation in part—the account balance of the annuity or pension, immediately after the commutation in part, would be equal to or would exceed the total payment amount calculated in accordance with Schedule 6, as reduced by the amount of payments (excluding amounts paid by way of commutation) to the annuitant or pensioner already made in the financial year in which the commutation in part would occur; or
(c) the annuity or pension has paid, in the financial year in which the commutation is to take place, at least the minimum amount under subregulation (3).
(3) For paragraph (2)(c), the minimum amount is calculated using the formula:
Start formula annual amount times start fraction Days in payment period over Days in financial year end fraction end formula
where:
annual amount for the financial year means the amount worked out in accordance with Schedule 6 for the annuity or pension, rounded to the nearest 10 whole dollars.
days in payment period means the number of days in the period that:
(a) starts on:
(i) if the annuity or pension commenced in the financial year in which the commutation is to take place—the commencement day; or
(ii) in any other case—1 July in that financial year; and
(b) ends at the end of the day on which the commutation is to take place.
days in financial year means the number of days in the financial year in which the commutation is to take place.
1.07D Commutation of superannuation income stream
(1) For paragraphs 1.05(1)(d) and 1.06(1)(b), a benefit meets the standards of this regulation if, under the applicable contract or rules, the annuity or pension cannot be commuted, in whole or in part, except in the following circumstances:
(a) the commutation results from the death of the annuitant or pensioner or a reversionary annuitant or reversionary pensioner; or
(b) the sole purpose of the commutation is:
(i) to pay a superannuation contributions surcharge; or
(ii) to give effect to an entitlement of a non‑member spouse under a payment split; or
(iii) to meet the rights of a client to return a financial product under Division 5 of Part 7.9 of the Corporations Act 2001; or