Support Query
How do I input opening balances for pension members?
I am setting up a fund, how to enter members in pension phase?
Solution
Steps
Prior to adding a pension account, an existing accumulation account needs to be added and the opening balance is posted to the accumulation account. The account(s) can then be converted to pension.
Before proceeding ensure that a System Start Date has been input. This article will breakdown the process of inputting opening balances for pension accounts into the following three steps (select each tab):
- Adding the initial accumulation account;
- Input the member balances;
- Convert the pension account(s) for the member from the accumulation account.
In this example, the fund is being setup in Simple Fund 360 as of 30 June 2015. The first active financial year in Simple Fund 360 will be the 2016 year. One member, John Jones has two account balances, one accumulation and one pension. Detailed balances are:
| Account | Balances |
|---|---|
| Accumulation (Start Date xx/xx/xxxx) |
$400,000 Preserved $300,000 Taxable $100,000 Tax-Free |
| Pension (Start Date xx/xx/xxx) |
$109,129.30 Unrestricted Non-Preserved $100,000 Taxable $9,129.30 Tax-Free Tax-Free Proportion 8.37% (rounded) |
| Total |
$509,129.30 $400,000 Taxable $109,129.30 Tax-Free |
Add Accumulation Account
Ensure the Financial Year in Fund Details is open from the fund establishment date to the date of the last financial statements.
For example, if the fund establishment date was 14/06/1994 and the date of the financial statements was the 30/06/2015 the date range would appear as:
| From the Main Toolbar, go to Member. |
|
| Select Member list. |
|
- From the Member List screen, select New Member Account and from the drop-down list below, select New Accumulation Member.
- Input the member's personal details. If the member has been added to the Contacts list in Simple Fund 360 (see Getting Started: Add a Person if the member has yet to be added) begin inputting their name into the Select Member From Contacts search bar and select their name from the drop down list that appears below.
- Simple Fund 360 will create a MEMBERCODE based on the member's name (editable).
Once you have saved the member account, the MEMBERCODE is no longer editable. - Input the following details for the member.
Account DetailsExplanation
Account Description Insert an account description. This is a mandatory field. For example, if the account is a pension account, input the type of pension account (such as Account Based). Start Date (Date Joined Fund) Input the date the member joined the fund. If you need to input/change the date the member joined the fund and it is outside of the current financial year date range in Fund Details, the date range will need to be opened temporarily. You will receive an error if the date range is outside the current financial year. Service Period Start Date Input the date the member began receiving contributions from their latest employer. -
Select Save to add the member to the fund. The following message will appear:
5. Select Yes to input opening balances for the member. Refer to the next tab.
Input Member Balances
In this task we will record the opening balances for John's two accounts. These will be combined into the one journal. The account breakdown is as follows:
| Account | Balances |
|---|---|
| Accumulation (Start Date xx/xx/xxxx) |
$400,000 Preserved $300,000 Taxable $100,000 Tax-Free |
| Pension (Start Date xx/xx/xxx) |
$109,129.30 Unrestricted Non-Preserved $100,000 Taxable $9,129.30 Tax-Free Tax-Free Proportion 8.37% (rounded) |
| Total |
$509,129.30 $400,000 Taxable $109,129.30 Tax-Free |
| From the Main Toolbar, go to Accounting. |
|
| Select the Transaction list from the list. |
|
| Select the New Transaction. |
|
| Select Journal. |  |
From the Transactions screen, input the members' opening balances.
| Date | Input 30/06/2015 |
| Reference | Input 1 |
| Description | Opening Balance - John Jones |
| Select an account | Select Account 50010/MEMBERCODE. This account was created in the first tab. |
| Amount | Input a credit amount of $509,129.30 |
| More Details Panel | Select  to enter the opening Balance Details |
| Rollover Components | Input Tax Free Component $109,129.30 |
| Input Taxable Component $400,000 | |
| Preservation Amounts |
Input a Preserved Balance of $509,129.30 Note: The unrestricted non-preserved component will be recognised when the pension is commenced in the next step. |
|
|
|
| Select an account |
Select Account 94920 Member Data Clearing Account |
| Amount | Input a debit amount of $509,129.30 |
To post the journal, select Post.
Create Pension Account(s)
| Pension Details | Balances |
|---|---|
| Pension (Start Date xx/xx/xxx) |
$109,129.30 Unrestricted Non-Preserved $100,000 Taxable $9,129.30 Tax-Free Tax-Free Proportion 8.37% (rounded) Centrelink Original Purchase Price: $80 |
Once the member balance has been entered in, convert the member into pension.
To convert the member to a pension account.
| From the Main Toolbar, go to Member. |
|
| Select Member list from the list. |
|
| Select New Member Account. |  |
| Select New Pension Account. |  |
-
Input the date the pension commenced in the fund by entering the Start Date. If the pension commenced prior to the accumulation account input the start date of the accumulation account. The correct pension start date will be recorded after the pension is created (see step 8).
-
Select the Pension Account Type. The following account types can be selected.
Pension Type Account Based Pension Allocated Pension Market Linked Pension Complying Pension Transition to Retirement Note: You can input the Original Term for a Market Linked Pension:
-
Select the existing accumulation account to convert to the pension account. When the account is selected, the current account balance will be displayed.
-
Is the full balance being used for the pension?
You are also able to specify a Percentage of members balance which will calculate the percentage entered of the current account balance - e.g. 20% of the original accumulation balance.No Select No. Input the Specific amount being transferred from the existing account. In this example the pension amount is $109,129.30. -
Select Unrestricted Non Preserved to the question What component would the amount be transferred to?
SF360 will automatically calculate the tax free proportion for the pension account. You can check the tax free proportion calculated by SF360 from the Member List once you have added the pension account.
-
Adjust the preservation components to correctly reflect the pension account for the member.
Pension Amount breaches transfer balance cap
If the pension balance as of the 30/06/20XX is greater than the transfer balance cap, the system will display a warning that the pension commencement will breach the transfer balance cap. This warning can be ignored, as the TBAR event associated with the pension commencement will need to be adjusted in the Transfer Balance dashboard to the correct commencement amount.
-
Enter further member financial details, which may be shown on the Members Statement, such as the Original Purchase Price on the Centrelink/DVA Schedule. If the field is not shown, select the Add Line option.
-
Select Save and from the drop down list, select Save Only. Select Cancel if you wish to abort the changes. Repeat these steps if the member has more than one pension account.
-
Optional Step: If the pension commenced prior to the accumulation account of the member (refer to step 1), the pension start date can be edited to the original date in The Member List. Select the pension account and input the commencement date in the Start Date field. Select Save.
-
Once all accounts have been added continue with the fund setup process. Refer to Lesson 2 - Fund Setup. Adjust the Financial Year in Fund Details back to the date of the financial statements (for example, 01/07/2014 - 30/06/2015).
Transfer Balance Account
When entering opening pension balances on or after 30/06/2017, a Transfer Balance Account adjustment will also need to be recorded in the first financial year processed in SF360.
As an example, opening balances entered on 30/06/2019 would require a Transfer Balance Account Adjustment on 01/07/2019 as the first reporting period for these opening balances would be the 2020 FY.
To enter the opening pension balance Transfer Balance Account transaction in Simple Fund 360 a manual adjustment will be added to the Transfer Balance Dashboard.
Example:
| Entry Date | 01/07/2020 |
|---|---|
| Transaction Type | Existing Pension Balance |
| Member Account Code | SF360 Member Account Code |
| Event Type | SIS |
| Credit | Pension Value |
| From the Main Toolbar, go to Member. |
|
| Select Transfer balance dashboard from the list. |
|
Select Add Adjustment to input any adjustment.
For example, an opening pension balance of $500,000 has been entered for John Jones as at 30/06/2020. The corresponding Transfer Balance adjustment would be entered on 01/07/2020 as follows:
(Right-click the image and select "Open image in new tab" to view in full size)
This is automatically generated in the Transfer Balance Dashboard. For information on how to report this even to the ATO, please see TBAR Management.