Term Allocated Pension Changes

This article is relevant for members of MLC MasterKey Term Allocated Pension (MKTAP).

Background

Effective 7 December 2024, regulations were passed allowing the full commutation of Term Allocated Pension (TAP) accounts for a limited period, ending on 6 December 2029.

‘Commutation’ is the process of converting a pension income stream into a lump sum. Once commuted, the lump sum can be rolled over to another superannuation or pension arrangement or paid out as a cash withdrawal. Prior to this regulation, TAP accounts could only be commuted in very limited circumstances.

What's changing?

MKTAP members can request the full commutation of their TAP account to a lump sum. There are a number of options available to members:

• Do nothing. The existing TAP account arrangements will remain unchanged,
• Transfer the account balance to a new or existing superannuation accumulation account¹,
• Use the account balance to commence an account-based pension²,
• Withdraw the account balance as a cash lump sum.

How to commute a TAP account?

Members can request the commutation of their TAP account, by completing and returning the Full withdrawal and rollover request form available at mlc.com.au

Please note that commutations must be completed before 6 December 2029.

Social Security benefit impacts and other information

Term Allocated Pension products can be complex. Commuting a TAP account may affect eligibility for Social Security benefits and limit the ability to contribute to or transfer funds into a superannuation accumulation or account-based pension account.

We recommend that members speak with their financial adviser for assistance in assessing the options.