In-specie transfer of shares as a pension payment?

1 min read
14/10/14 12:24

Can a pension payment be paid with an in-specie transfer of shares or will this be considered a payment of a lump sum rather than a pension payment?


The current industry view is that pension payments should be paid in cash and not as in-specie payments.

The ATO has also suggested that pension payments should be paid in cash and this seems to also be the view of APRA.

Under part 6 of the SIS Regs, the term lump sum “includes an asset”. However, there is no similar definition stating that the term “pension payment” includes an asset. As a result, APRA has taken the view that a pension cannot be paid in-specie.

See Superannuation Circular No. I.C.2 Payment Standards for Regulated Superannuation Funds.

However, having said that, there may be some scope for a lump sum payment to be used to meet the minimum pension payment (standard) required - and this could be via an in-specie payment form of pension.

This would effectively be a partial commutation (not a full commutation).  In addition, the lump sum payment, can only be paid when the member has met a condition of release with nil cashing restrictions.

Note that an election under Reg 995-1.03 to class the payment as a lump sum must be made at or before the payment is made.

It would be a good idea to have other cash payments of pensions paid during the year (and not just a single in-specie payment) , as it is our understanding that the ATO generally does not like the arrangement where the only pension paid is as a single lump sum/in-specie payment. 

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