“If they have a balance that is over $1.6 million and they’ve got a market-linked pension, they can then basically commute or get rid of that market-linked pension because they have more than the $1.6 million. The special rules allow you to get out of those market-linked pensions if it pushes you over $1.6 million,” Ms Schaefer explained.

Ms Schaefer noted the issue for many SMSF trustees that still have legacy pension products in their SMSFs is that, the superannuation rules have moved on and these older style products are no longer relevant.

“I know that the industry is still having conversations with the ATO and Treasury about trying to get some clarity or simplification around some of these things in terms of sorting out the regulations,” she said.

Ms Schaefer added there are a few potential ways where Treasury could help simplify how the super reforms interact with legacy pension products, particularly with how they are valued.

“Rather than have these fantastic calculations, [the government could] just have them count towards the transfer balance account, based on their account balance – so what is in the actual pension account –  particularly for a market-linked pension, which is only ever paid out based on the account anyway,” she said.

“The other thing is, of course, to just regulate the fact that you can unwind these old products and convert them into account in order to [allow] compliance with these new rules.”