Does my SMSF require an Actuarial Certificate?
Does the fund need an Actuarial Certificate?
Part 1 — Initial questions potentially leading to the Segregation questions
DEFINITIONS AND CONSIDERATIONS FOR YOUR DECISION MAKING:
Retirement Phase (RP) – refers to a Retirement Phase Income Stream (RPIS) where the member has met a condition of release and the income stream they are receiving is anything other than a Non-Retirement Phase TRIS.
Non Retirement Phase (NRP) – any account that’s not a RPIS i.e. Accumulation Account, Reserve or Non-Retirement Phase TRIS.
Defined Benefit Pension – a Lifetime Complying, Term Complying or Flexi Pension. Does not include Market-Linked/Term Allocated Pensions.
DEFINED BENEFIT PENSION
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NOTE: If the fund is paying any Defined Benefit Pensions, it is worth considering commuting these pensions to start Account-Based Pensions. This reduces the cost and complexity of the annual Actuarial Certificate (potentially removing the requirement for an Actuarial Certificate) and also reduces the complexity of maintenance of the SMSF.
Solely Retirement Phase – this includes those circumstances where the FY begins with one or more Accumulation Accounts that are immediately converted into Retirement Phase Income Streams (Pensions) on 1 July, resulting in the entire fund being in Retirement Phase. For the purposes of Actuarial Certificates, these will be treated the same as if that pension was in place prior to the start of the FY in question.
Disregarded Small Fund Assets – occurs where just prior to the start of the FY, there is at least one member with a Total Super Balance greater than $1.6 million and that member is also receiving a RPIS (inside or outside the SMSF).
Elected Segregation – the Trustees nominate one or more assets as ‘Retirement Phase Only’. This means the earnings from those assets is exempted from income tax (using the Segregated Method) and any capital gains are immunized from CGT.
Trustees can elect to segregate ALL assets supporting the RPIS (i.e. asset values = total balance of all RPIS in the fund) this means the assets of the fund are fully segregated for taxation purposes. Alternatively, Trustees can choose to segregate some of the assets supporting the pensions (i.e. asset values < the total balance of all RPIS in the fund). This is known as partially segregated assets.
IMPORTANT NOTE: The SMSF is eligible to use the Segregated Method if it does NOT have Disregarded Small Fund Assets in that FY.
This is regardless of whether the circumstances of the Retirement Phase balances for the year enable the use of the Segregated
Method. There is a difference between eligibility and ability in this context.
Default Path: No Segregation Election Made - still potential for Deemed Segregated Periods
STATUS:
Retirement Phase Interests? Yes
Defined Benefit Pensions? No
Solely Retirement Phase for the full year? No
Disregarded Small Fund Assets? No
Elected to Segregate Assets? No
Solely Retirement Phase days? If there are no days in the FY where the entire fund is in Retirement Phase, then the only option is to obtain an Actuarial Certificate using the Unsegregated Method. But if there are days of RP only, Trustees have a choice.
ECPI Choice: If there are any periods where the fund is entirely in Retirement Phase for at least a day, then the Trustees have a choice whether to use the Segregated Method for those Deemed Segregated Periods (and the Unsegregated Method for the remainder of the FY) or to simply use the Unsegregated Method for the whole year. Just because the members did not choose to segregate assets, does not mean that the fund is unable to claim income-tax exemption using the Segregated Method.
Segregation Election Made
Fully Segregated (100% of RP balance) – because all earnings from the
Retirement Phase (RP) Assets can be clearly distinguished from earnings from the Non Retirement Phase (Non RP) Assets – it is easy to determine what tax is payable and therefore no requirement for an Actuarial Certificate.
Partially Segregated (assets segregated are less than 100% of the RP
balance) – an Actuarial Certificate is required to claim exemption from the
Retirement Phase proportion of the Unsegregated Pool of RP and Non RP assets.
These certificates will have to be requested manually (via Excel Form) as they cannot be requested via BGL, Class or SuperMate.
Other than with Defined Benefit Pensions, an Actuarial Certificate is only required to support claims for
exemption if using the Unsegregated Method. When claiming exemption using only the Segregated Method, no
certificate is required. Additionally, if NOT claiming exemption (due to insufficient earnings or low percentage)
no certificate is required.
Andy O’Meagher – Act2 Solutions, August 2026