Exempt current pension income method checklist

Determine the correct method to calculate Exempt current pension income (ECPI) for your fund.

Last updated 11 April 2022

Use this checklist when you need to determine the correct method to calculate Exempt current pension income (ECPI) for your fund.

Calculate ECPI for 2021–22 and future income years

Follow the steps below to determine the correct method to calculate ECPI for your fund for the 2021–22 and future income years.

Determine the correct method to calculate ECPI for 2021–22 and future income years
Steps	Go to
1. Were all of the fund's assets held solely to support retirement phase income streams at ALL times during the income year?	Yes. Go to method A No. Go to step 2
2. Did the fund have Disregarded Small Fund Assets by meeting all of the following criteria: have at least one retirement phase income stream at any time of the year have a fund member with a total super balance over $1.6 million immediately before the start of the relevant income year; and did that member receive a retirement phase income stream from any fund (not necessarily this SMSF)?	Yes. Go to method B No. Go to step 3
3. Did the fund segregate their assets to pay retirement phase pensions? This includes where the fund held all of its assets in retirement phase pensions at any time during the year, or where the fund otherwise segregated their assets	Yes. Go to method C No. Go to step 4
4. Did the fund pay a retirement phase income stream without segregating their assets?	Yes. Go to method B No. Go to method D

Methods for 2021–22 and future income years
Method	How to calculate ECPI
A	The fund must calculate ECPI using the segregated method where it is in 100% retirement phase for all of the income year. Note – The disregarded small fund assets rule does not apply to these funds. An actuarial certificate will not be required when the fund is using the segregated method unless the retirement phase income stream paid is NOT one of the following: allocated pensions market-linked pensions account-based pensions
B	The fund must calculate ECPI using the proportionate method when they: have no segregated current pension assets have disregarded small fund assets. Funds using the proportionate method will need an actuarial certificate for each year they claim ECPI, regardless of the type of retirement-phase income stream being paid.
C	The fund can choose to use the proportionate method to calculate the ECPI for the entire income year. If no choice is made, ECPI will be calculated using the segregated method for the period of segregation.
D	By selecting No at steps 1, 3 and 4 you have determined that none of the fund’s assets were used to support retirement phase income streams. Therefore, the fund is not eligible for ECPI. If this is not correct, go back to step 1.

Follow the steps below to determine the correct method to calculate ECPI for your fund for the 2017–18 to 2020–21 income years.

Determine the correct method to calculate ECPI for the 2017–18 to 2020–21 income years
Steps	Go to
1. Did the fund have disregarded small fund assets by meeting all of the following criteria: have at least one retirement-phase income stream at any time of the year have a fund member with a total super balance over $1.6 million immediately before the start of the relevant income year did that member receive a retirement phase income stream from any fund (not necessarily this SMSF)?	Yes. Go to method B No. Go to step 2
2. Were all of the fund’s assets held solely to support retirement phase income streams at all times during the income year?	Yes. Go to method A No. Go to step 3
3. Were all of the fund’s assets held to support retirement phase income streams at any time during the income year? Or did the fund otherwise segregate their assets to pay retirement phase income streams?	Yes. Go to method C No. Go to step 4
4. Were some but not all of the fund’s assets held to support retirement phase income streams at any time during the income year?	Yes. Go to method C No. Go to method D

Methods for 2017–18 to 2020–21 income years
Method	How to calculate ECPI
A	The fund must calculate ECPI using the segregated method for any portion of the income year where it is in 100% retirement phase and does not have disregarded small fund assets or if they segregated assets. An actuarial certificate will not be required when the fund is using the segregated method unless the retirement phase income stream paid is NOT one of the following: allocated pensions market-linked pensions account-based pensions.
B	The fund must calculate ECPI using the proportionate method when they: have no segregated current pension assets have disregarded small fund assets. Funds using the proportionate method will need an actuarial certificate for each year they claim ECPI, regardless of the type of retirement-phase income stream being paid.
C	The fund may need to use a combination of methods A and B if it becomes 100% in retirement phase within the same income year it has used the proportionate method. In these circumstances, they must: use the segregated method for any period the fund had segregated their assets to pay retirement phase pensions (including any time where the fund had 100% of its assets supporting retirement phase pensions) use the proportionate method for any other period.
D	By selecting No at steps 2, 3 and 4, you have determined that none of the fund’s assets were used to support retirement phase income streams. Therefore, the fund is not eligible for ECPI. If this is not correct, go back to step 1.

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