Segregated SMSF – is it a true segregation?

Often accountants, due to their generous nature, try to avoid obtaining an actuarial certificate by manually apportioning income and expenses.  However, where a member is accessing a transition to retirement pension and contributing to the fund, this method of apportionment is not a true segregation of assets.A segregated fund is one where assets are specifically separated to back the pension or the accumulation account, or specifically back a member.  However, even when backing a member, an actuarial certificate may still be required where the pool of assets is backing both pension and accumulation accounts at any time during the financial year.  The ATO is of the view that part of an asset ie a bank account cannot be segregated.

In light of the ATOs view, to truly segregate and avoid the need for an actuarial certificate for this type of fund, there would need to be a bank account purely for pension transactions and a bank account purely for accumulation transactions.  All assets would need to be clearly identified as either a pension asset or an accumulation asset.  This would need to be documented and also considered in the investment strategy.

Using the unsegregated method and obtaining an actuarial certificate can be less complicated, saving you lots of time and effort.  If you currently use the segregated method, you can opt to unsegregate the fund by minuting the decision and obtaining the actuarial certificate.