“We seek clarification on whether additional guidance will be given on how SMSF trustees should determine appropriate communication factors,” the institute said.

In its submission, the Actuaries Institute gave an example of an SMSF trustee with a market-linked pension where the account balance of their pension is $2 million at 1 July 2017 and the remaining term is ten years.

“The payment factor for this pension is 8.32, meaning [the trustee] can opt to receive a pension payment of between $216,350 and $264,420 in the 2018 financial year,” the submission said.

“The special value of [the] trustee’s superannuation is, therefore, between $2.16 million and $2.64 million, depending on how much pension he decides to draw from his SMSF.”

Assuming the trustee opts to take the minimum, the submission said his special value will be $563,500 over the transfer balance cap.

The Actuaries Institute said it is unclear in situations like this whether the trustee has the option of partially commuting his market-linked pension in order to bring his special value below the transfer balance cap and if so, how the commutation value should be calculated.

“If he commutes the excess special value of $563,500, leaving the market-linked pension account balance at $1,436,500, then the required payment for the 2018 year is between $155,390 and $189,920,” it said.

“If he instead commutes the ‘real’ excess account balance of $400,000, leaving $1.6 million in his market-linked pension, the required payment for the 2018 year is between $173,080 and $211,540.”

The Actuaries Institute said these payment options are obviously in excess of the defined benefit income cap.

“Would the [trustee] be required to include the appropriate proportion of the excess defined benefit income in his individual tax return?” the submission asked.

“If so, can he opt to commute a different amount such that his required pension payments fall below the defined benefit income cap?”