Do I need an actuarial certificate?

Do I need an actuarial certificate?

The most common question we are asked is "does my SMSF need an actuarial certificate?".

The best way to start this article is to look at the situations where Actuarial Certificates are certainly not required.  If all of the fund is in accumulation for all of the year, then there is no ECPI (Exempt Current Pension Income).  So no Actuarial Certificate is needed.  Similarly, if all of the fund is in pension for all of the year, then once again, no Actuarial Certificate is required because 100% of income is ECPI.

Another situation in which a fund never requires an Actuarial Certificate is when the fund is operated on a segregated basis.  

Now let's consider these situations:

• An unsegregated fund that is in accumulation for part of the year, and pension for the remainder of the year.  This includes a single member fund which commences a pension during the year and therefore converts from accumulation to pension.
• An unsegregated fund that has a member who is in both pension and accumulation at the same time.   For example the member could have a pension at the start of the year, then receiving a contribution, and then convert the contribtution to pension shortly afterwards.
• An unsegregated fund with 2 members that has one member in accumulation and the other member in pension

In all 3 of these cases an actuary is required to determine what percentage of the fund was in pension and what percentage was in accumulation when averaged across the year.  Therefore an Actuarial Certificate is required.

You might also find some situations where you choose not to obtain an Actuarial Certificate because the cost of the Certificate outweights the benefit.  Examples might be where the Exempt Current Income Percentage is very small, the assets are low, or investment earnings are minimal (or even negative).  

If you would like to discuss your situation with us then call us on 1300 546 300.  Once we understand your situatution then we can advise whether you need an Actuarial Certificate.  

Based on this article, if you are sure that you need and Actuarial Certificate then there is no time like the present.  You can save time and money by ordering you next actuarial certificate from us.

THIS ARTICLE WAS CORRECT AT THE TIME OF WRITING. SMSF RULES CHANGE OVER TIME AND THE ARTICLE MAY BE LESS RELEVANT IN THE FUTURE.