An actuarial certificate is a document prepared by an actuary that certifies how much of a self-managed super fund’s earnings are derived from its members’ accumulation phases and how much from retirement phases. This information has tax implications. It is used to claim exempt current pension income (i.e. tax-exempt earnings) in the fund’s annual tax return.
When is an actuarial certificate required?
An actual certificate is required whenever an SMSF member moves into the retirement phase and there are one or more other members of the fund that remain in the accumulation phase.
In addition, an actual certificate will be required each year that there is at least one member in each phase if the actuary is using the proportionate method to calculate the fund’s exempt current pension income. The proportionate method is based on the total value of the fund’s assets each year.
However, if the segregated method is used by an actuary to calculate a fund’s exempt current pension income, no actuarial certificate is required, provided that the retirement phase income streams being paid by the fund are one or more of the following types:
- an allocated pension,
- a market-linked pension,
- an account-based pension.
The segregated method separates assets between the accumulation and retirement phases.