If you’re holding a legacy pension or retirement income stream that started before September 2007, there’s some exciting news that could give you much more flexibility in managing your retirement finances. Recent changes that came into effect in December 2024 have opened up new opportunities for members with older superannuation products – and it’s worth understanding what this could mean for you.
What Exactly Are Legacy Pensions?
Let me start by explaining what we mean by legacy pensions. These are superannuation income streams that generally commenced before 20 September 2007, or were converted from even earlier products. They include various types of retirement products like:
- Lifetime pensions
- Life expectancy pensions
- Market-linked pensions
- Term allocated pensions
If you have one of these products through a self-managed super fund or smaller APRA-regulated fund, the new changes could apply to you. However, it’s important to note that large APRA-regulated super funds offering defined benefit products are excluded from these new rules.
The Game-Changing Updates
The December 2024 legislative changes have introduced two key improvements that could significantly impact your retirement planning:
1. Five-Year Exit Window Perhaps the most significant change is that you now have the flexibility to exit your legacy pension within a five-year period. This is particularly valuable if you’re looking to:
- Realign your retirement income strategy
- Switch to a different, more suitable retirement product
- Take advantage of current market conditions
- Simplify your superannuation arrangements
2. Reserve Allocation Changes The updates also affect how allocations from reserves are treated, particularly regarding contribution caps. This technical aspect highlights why it’s crucial to understand how any changes to your legacy pension might interact with the broader superannuation regulatory framework.
Who Can Take Advantage?
The beauty of these changes is their broad application. Whether you’re a member of a small APRA-regulated fund or have a self-managed superannuation fund, you may be eligible – subject to your fund’s trust deed, of course. This wide coverage means many people with legacy pensions can now consider options that simply weren’t available before.
Why This Matters for Your Retirement
These changes represent a rare opportunity to reassess and potentially optimise your retirement income arrangements. Legacy pensions were often established under different rules and market conditions, and what made sense years ago might not be the best fit for your current circumstances.
With greater flexibility now available, you might find that:
- Modern pension products better suit your current needs
- You can access features that weren’t available when your original pension was established
- Your retirement income strategy can be better aligned with your current financial goals
The Importance of Getting Professional Advice
Here’s where I need to emphasise something crucial: before making any decisions about commuting your legacy pension, please seek professional superannuation advice. While these new rules create opportunities, every person’s situation is unique, and what works for one person may not be suitable for another.
The superannuation landscape is complex, and legacy pensions often have specific features and benefits that could be lost if you make changes without fully understanding the implications. That’s why we always recommend a thorough review of your individual circumstances before making any moves.
How TSP Can Help
At TSP Accountants & Business Advisors, we understand that superannuation decisions can feel overwhelming – especially when it comes to products that have been in place for many years. With over 40 years of experience serving the Newcastle and Hunter Valley communities, we’re well-positioned to help you navigate these changes.
Our team can help ensure that any transitions away from legacy retirement products are managed effectively and in full compliance with regulatory requirements. More importantly, we’ll work with you to ensure any changes align with your broader retirement planning goals.
Ready to Explore Your Options?
If you have a legacy pension and want to understand how these changes might benefit you, we’d love to have a conversation. Every situation is different, and the best way to determine your options is through a personalised consultation where we can review your specific circumstances.
Contact us today:
- Phone: (02) 4926 4155
- Email: ad***@****************om.au
Remember, you have five years to consider your options, so there’s no rush – but there’s also no reason to delay getting the information you need to make an informed decision about your retirement future.
Deidre Molloy is the Specialist Superannuation Director at TSP Accountants & Business Advisors, bringing extensive expertise in superannuation and retirement planning to clients across Newcastle and the Hunter Valley. For personalised advice about your legacy pension options, contact our team today.
When not at work, Deidre enjoys spending time with her husband and two children, as well as indulging in audiobooks and coffee.
Areas of Expertise:
✅ Business structuring & compliance
✅ SMSF strategy & auditing
✅ Tax planning for individuals & businesses
📧 deidrem@tspaccountants.com.au
- Legacy Pensions: New Flexibility – What You Need to Know - 04/07/2025
- Improve Cash Flow with Better Bookkeeping - 30/05/2025
- Best Ways to Maximise Your Superannuation Returns - 07/05/2025