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How to add a 'Return of Capital' pension fund (super or SMSF)

The 'Return of Capital' pension income test rules apply to account-based pensions started before 1 July 2015, and which haven't undergone an event that would cause the pension to lose that status, such as refreshing the pension. Pensions started after 1 July 2015, or which no longer have the 'Return of Capital' status use the 'Deeming' income test rules, which are the default in Pathfinder.

If your case has an individual with a superannuation fund or SMSF where the 'Return of Capital' pension income test rules apply, you just need to select this option when you enter the details:

  • Add the SMSF or Superannuation fund as normal (for more detail on adding these items, see Superannuation (a.k.a Super) and SMSF (Self-Managed Super Fund))
  • For the 'Pension income test rules' field on the superannuation or SMSF, choose 'Return of Capital' (by default, it will be set to 'Deeming')

In the modelling:

  • Pathfinder will not allow any further funds to be rolled over into the account-based pension for either an SMSF or an account-based pension:
    • NOTE: In practice, it is possible for an individual to start a second pension in their SMSF without affecting the status of an existing 'Return of capital' account-based pension, however, this isn't possible in Pathfinder.
  • Pathfinder will apply to 'Return of capital' rules when estimating their Age Pension payments

In the results, you can review the Age Pension estimate on the 'Detailed reports' under: (Individual name) > Government Pension > Income test.

For more details about reading the results, see Retirement Planning and Build Super results.

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