This article will guide you through processing a pension commutation. The Pension Commutation event will post a transfer out from the member's Pension account into their Accumulation account.
The minimum pro-rata pension needs to have been paid for the commuted pension for the financial year. Refer to the Browse Pension Review screen to assist with calculating the pro-rata amount.
Ensure you have first reconciled the fund up to the date of commutation and prepared a Period Update the day before the commutation date. Please note the period update is not required if the pension commutation happens on 1 July.
Navigate to Fund Level > Members > Pension Commutation
- Select Member using the drop-down
- Select the pension account the transfer is being made from, using the drop-down
- The Last Period Update will be auto-filled based on the last period update prepared
- The Last Period Review will be auto-filled based on the last Pension Review
- Enter Transfer Date in the following date format, DD/MM/YYYY
- Enter Description, or use the Class default "Pension Commutation"
- Select Payment Type using the drop-down. Use Cash Lump Sum if the payment was made in cash/investments to the member, or Payment to Accumulation if the payment is being rolled back to the member's accumulation account
- Select Reason for Commutation using the drop-down. The reason selected will automatically map into the defined TBAR event
- Under Payment Amount, select Partial for a partial commutation, or Full for a full pension commutation
- Select the Next button
Partial Pension Commutation - Transfer Balances
- If the commutation is related to a Partial commutation, enter the Benefit Amount being commuted or the Percentage rate, as displayed below.
- Click Submit
Full Pension Commutation - Transfer Balances
- If the commutation is related to a Full commutation, the Benefit Amount and Percentage will be auto-filled as displayed below
- Click Submit
TBAR Event-based Reporting for Pension Commutations. Pension commutation data from 1 July 2017 will be captured accordingly for inclusion in the Transfer Balance Account (TBAR). If the commutation happens on or after 1 July 2017, an additional field called 'Reason For Commutations' will be displayed. You will be required to select the relevant reason for commutation from the drop-down menu to ensure the data is captured and reported correctly according to the TBAR requirement.
After processing the pension commutation, under the Transfer Balances tab you can generate and print the Pension Commutation minutes by selecting the "Print Commutation Reports" button.
After processing a Partial Pension Commutation, learn how to adjust the Period Reviews for the pension account commuted.