Perhaps the most commonly requested account conversion is from Accumulation Account (used by working members to accumulate savings for retirement) to Pension Account. Members will typically request this conversion be made when they attain legal retirement age and retire from full-time or substantial part-time employment.
Fund members opting to semi-retire may request conversion of an Accumulation Account to a Transition to Retirement (TTR) Account.
In either case, the conversion may be of the full account balance, or only part thereof. Some members may opt to retain a portion of their account balance in an Accumulation Account after conversion.
Prerequisites and Verifying the Member Account Balance
Before effecting a conversion from Accumulation Account to a Pension or TTR Account, Trustees should verify that:
1. The member has an active Accumulation Account with a balance greater than $0
2. The member meets the conditions of release (Refer to Legal Considerations: Conditions of Release)
3. Account entries for the period up to the day prior to the date the pension or TTR account is to commence have been completed. (Further entries will not be able to be posted after this process has been completed.)
Verifying the Account Balance or Generating an Interim Balance
For account conversions on July 1 in a selected year, the first step is to ensure the End of Year Processing has been completed and account balances are current as at June 30 of that year.
Once you have verified that the end of year processing is complete, go directly to Completing Conversion to convert an account from July 1.
To convert an account from a date other than July 1, proceed with all the steps below to create an Interim Period and generate an Interim Account Balance.
The date of the Interim Account Balance (referred to as 'the Interim Date') should be one day prior to the date on which the new account is to commence.
For example, if the member has requested the new account to operate from 1st January, 2018, the Internet Account Balance should be calculated as at 31st December 2017.
Setting an Interim Date and proceeding with steps to calculate Interim Account Balances closes the period up to the Interim Date.
No further entries are permitted for dates prior to the Interim Date specified once this process is complete, except by reversing the process.
DO NOT proceed if your account entries for the period prior to the Interim Date are incomplete.
The process to verify the Interim Account Balance is similar to the process for closing a financial year. Trustees of Self-Managed Superannuation Funds may need professional assistance to complete this process.
Regardless of the method used, it may not be possible to guarantee absolute accuracy in the calculation of an Interim Member Balance when conversion is performed mid-year. For example, Trust Tax Distribution data may not be available, as statements are generally sent after the end of the financial year.
Some asset valuations may only be available at selected end of period dates, and may not be exact for the Interim Date selected.
It is generally recognised that no calculation method will result in absolute accuracy in computing mid-year account balances. When the next year-end closing is performed, the Mclowd™ system will compensate, to the most accurate degree reasonably possible, for any minor discrepancies.
