Minimum Pension Payments and DIY Superannuation
Article by Melanie Cath
Understand the ensuing debate about DIY superannuation funds and minimum pension payment for trustees.
A DIY superannuation fund is one that is operated by a set of trustees. Each of these trustees needs to be part of the DIY superannuation fund and cannot be an employee of the DIY superannuation. According to the laws of the DIY superannuation, each of the trustees needs to receive a certain amount of money as pension every year. Some of these also have a maximum income that is determined by laws that govern DIY superannuation funds.
This maximum and minimum income is decided based on the age of the member who is part of the DIY superannuation fund trust. This amount is based on the amount of money in the trustees account as on July 1, every year.
The working of the maximum and minimum pension for a trustee, the DIY superannuation fund assets are valued on the basis of the new market value. This does not mean that the DIY superannuation funds are valued in that manner but only implies that the working of the pensions is based on this value.
Situations where less than the minimum amount is paid to a trustee of the DIY superannuation causes issues if the total amount is lower than the minimum amount over the year. This can happen due to a mistake or an oversight or insufficient cash to make the pension payment.
While this is a breach of the DIY superannuation laws, there are accountants that have created ways of handling this issue. They show the difference between the minimum pension payable and the actual amount paid as accrued liability in the DIY superannuation fund trustee?s name.
There is currently a debate about whether such a practice is ethical or not. And the decisions could have huge ramifications for DIY superannuation funds.
About the Author
Mel writes about diy superannuation among other finance related topics.
Posted by Dan on Friday, October 7, 2011 at 7:34 pm?
Filed under DIY ? Tagged with Accountants, Accrued Liability, Amount Of Money, Breach, Debate, Diy Superannuation Funds, Ethical Decisions, Fund Assets, July 1, Maximum Income, Melanie, Minimum, Minimum Pension, Mistake, Oversight, payments, Pension, Pension Payment, Pension Payments, Pensions, Ramifications, Superannuation, Trustee
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