Veterans’ Entitlements (Actuarial Certificate—Life Expectancy Income Stream Guidelines) Determination 2013

Administered by Department of Veterans' Affairs

Legislation au F2013L00671 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

Veterans’ Entitlements (Actuarial Certificate – Life Expectancy Income Stream Guidelines) Determination 2013

 

 

Summary

 

The Veterans’ Entitlements (Actuarial Certificate – Life Expectancy Income Stream Guidelines) Determination 2013 (the Determination) is made under subsection 5JB(1C), paragraph 5JB(1A)(b), and subsection 5JB(5), of the Veterans’ Entitlements Act 1986 (the Act).

 

Background

 

Section 5JB of the Act sets out the meaning of an asset-test exempt income stream (life expectancy income streams). The term asset-test exempt income stream is relevant in a number of contexts within the Act including in determining what assets are to be disregarded in calculating the value of a person’s assets for the purposes of the asset test under the Act.

 

Subsection 5JB(1) of the Act provides that an income stream provided to a person is an asset-test exempt income stream if certain requirements are met. Among other things, one of these requirements is that, at paragraph 5JB(1A)(b) and subject to subsections (1C), (1D) and (1E), the Repatriation Commission (Commission) is satisfied that in relation to an income stream, provided by a class of provider specified by the Commission for the purposes of this paragraph, there is in force a current actuarial certificate that states that the actuary is of the opinion that, for the financial year in which the certificate is given, there is a high probability that the provider of the income stream will be able to pay the income stream as required under the contract or governing rules. Among other things, the Determination specifies classes of provider for the purposes of this paragraph.

 

Subsection 5JB(1C) of the Act provides that the Commission may determine, in writing, guidelines (the Certificate Guidelines) to be complied with when determining whether an actuarial certificate is in force and what constitutes a high probability that the provider of the income stream will be able to pay the income stream as required under the contract or governing rules. The Determination sets out Certificate Guidelines under this subsection.

 

Subsection 5JB(1D) of the Act provides that if, on 30 June in a financial year, an actuarial certificate referred to in paragraph 5JB(1A)(b) is in force in relation to an income stream, then paragraph 5JB(1A)(b) does not apply in relation to the first 26 weeks of the next financial year, unless a further actuarial certificate is given to the Commission within that time.

 

Subsection 5JB(4) of the Act provides that the Commission may determine, in writing, that an income stream is an asset-test exempt income stream for the purposes of the Act. Subsection 5JB(5) of the Act provides that the Commission may, by legislative instrument, determine guidelines (the ATE Guidelines) to be complied with when making a determination under subsection 5JB(4) of the Act. The Determination sets out ATE Guidelines under this subsection.

 

The Determination replaces the Veterans' Entitlements (Actuarial Certificate—Life Expectancy Income Stream Guidelines) Determination 2009 (the 2009 Determination). The Determination includes a number of changes to the 2009 Determination, generally to simplify and consolidate the form of determination, but also to include:

 

  • New provisions requiring that actuarial certificates be certified no later than 26 weeks after the start of the relevant financial year; and

 

  • New provisions requiring that actuarial certificates be in force for the full financial year for which they are relevant.

 

The Determination is a legislative instrument that commences on the day after it is registered.

 

Explanation of Provisions

 

Part 1 of the Determination sets out preliminary provisions.

 

Section 1.1 states the name of the Determination.

 

Section 1.2 states that the Determination commences on the day after it is registered on the Federal Register of Legislative Instruments and applies to actuarial certificates given on or after the day the determination commences.

 

Section 1.3 states that the 2009 Determination is revoked.

 

Section 1.4 contains definitions and interpretation provisions that are relevant to the Determination.

 

Among other things, subsection 1.4 provides new definitions for the terms annuity backed self managed superannuation fund and annuity backed small APRA fund.

 

Subsection 1.4 defines high degree of probability to mean a certification by an actuary that a fund has a probability of at least 70 per cent of being able to pay the pension as required under the fund’s governing rules (paragraph (a) of the definition) or, a certification by an actuary that a fund has a probability of at least 50 per cent but less than 70 per cent of being able to pay the pension as required under the fund’s governing rules but special circumstances arise that, in the actuary’s opinion, if those circumstances had not arisen, the fund would as at the valuation date, have been able to be certified as having a high degree of probability (paragraph (b) of the definition). This is unchanged from the 2009 Determination.

 

Section 1.5 states the purpose of the Determination.

 

Section 1.6 specifies that, for the purposes of paragraph 5JB(1A)(b) of the Act, a provider of an income stream from a self managed superannuation fund, other than an annuity backed self managed superannuation fund, is a specified class of provider.

 

Section 1.7 specifies that, for the purposes of paragraph 5JB(1A)(b) of the Act, a provider of an income stream from a small APRA fund, other than an annuity backed small APRA fund, is a specified class of provider.

 

Part 2 of the Determination sets out Certificate Guidelines and ATE Guidelines.

 

Section 2.1 sets out Certificate Guidelines relating to self managed superannuation funds.

 

Subsection 2.1(1) provides that, subject to subsection (2), if the provider of an income stream is included in the class of provider specified in section 1.6 then a member or the trustee of the fund must provide an actuarial certificate to the Commission.

 

Subsection 2.1(2) sets out the general requirements of the actuarial certificate. These are that the certificate must be prepared in accordance with the Institute of Actuaries of Australia Guidance Note 465 (paragraph 2.1(2)(a)), certified no later than 26 weeks after the start of the financial year to which it applies and be provided to the Commission no later than 3 weeks after the end of that 26 week period (paragraph 2.1(2)(b)), and specify whether there is a high degree of probability of the fund meeting the income stream payments specified under the fund’s trust deed or governing rules (paragraph 2.1(2)(c)).

 

The actuarial assessment should be based on the fund’s financial statements for the previous financial year.

 

Paragraph 2.1(2)(d) provides that an actuarial certificate must also specify that it is in force for the full financial year (1 July to 30 June) in the financial year in which certification occurs.

 

Section 2.2 sets out Certificate Guidelines relating to small APRA funds.

 

Subsection 2.2(1) provides that, subject to subsection (2), if the provider of an income stream is included in the class of provider specified in section 1.7 then a member or the trustee of the fund must provide an actuarial certificate to the Commission.

 

Subsection 2.2(2) sets out the general requirements of the actuarial certificate. These are that the certificate must be prepared in accordance with the Institute of Actuaries of Australia Guidance Note 465 (paragraph 2.2(2)(a)), certified no later than 26 weeks after the start of the financial year to which it applies and be provided to the Commission no later than 3 weeks after the end of that 26 week period (paragraph 2.2(2)(b)) and specify whether there is a high degree of probability, at the valuation date, of the fund meeting the income stream payments specified under the fund’s trust deed or governing rules (paragraph 2.2(2)(c)).

 

The actuarial assessment should be based on fund’s financial statements for the previous financial year.

 

Paragraph 2.2(2)(d) provides that an actuarial certificate must also specify that it is in force for the full financial year (1 July to 30 June) of the financial year in which certification occurs.

 

Section 2.3 provides that if the actuarial certificate provided to the Commission by the person or the trustee of the fund under subsection 2.1(1) or subsection 2.2(1) does certify that for the financial year in which the certificate is given, there is a high degree of probability that the fund will be able to pay the pension as required under the fund’s governing rules, then paragraph 5JB(1A)(b) of the Act is satisfied.

 

Subsection 2.3(2) provides that despite subsection 2.3(1), if an actuarial certificate in relation to a financial year is not certified under subsection 2.1(2)(b) or subsection 2.2(2)(b) within 26 weeks beginning on 1 July of that financial year, or provided to the Commission by the person or the trustee of the fund under subsection 2.1(1) or subsection 2.2(1) within 29 weeks beginning on 1 July of that financial year then paragraph 5JB(1A)(b) of the Act is considered to be not satisfied and the income stream is to be determined to be an asset-tested income stream (long term).

 

Section 2.4 deals with situations where a high degree of probability is not certified by an actuarial certificate.

 

Section 2.4 provides that if the actuarial certificate provided to the Commission by the person or the trustee of the fund under subsection 2.1(1) or subsection 2.2(1) does not certify that for the financial year in which the certificate is given, there is a high degree of probability that the fund will be able to pay the pension as required under the fund’s governing rules then paragraph 5JB(1A)(b) of the Act is considered to be not satisfied and the income stream is to be determined to be an asset-tested income stream (long term).

 

Consultation

 

Consultation in respect of the Determination was undertaken by e-mail/telephone with the Department of Families, Housing, Community Services and Indigenous Affairs.

 

Document Incorporated by Reference

 

The Institute of Actuaries of Australia Guidance Note 465.  This document may be located at the following Internet address:

 

http://www.actuaries.asn.au/library/standards/GN4651.PDF

 

Regulatory Impact Analysis

 

The Determination is not regulatory in nature, will not impact on business activity and there will be no additional compliance costs. The Determination will have no, or minimal, competition impacts.


Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights

(Parliamentary Scrutiny) Act 2011

 

The Veterans’ Entitlements (Actuarial Certificate – Life Expectancy Income Stream Guidelines) Determination 2013

 

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Overview of the Legislative Instrument

 

This legislative instrument provides guidelines to be complied with when determining whether an income stream is an asset-test exempt income stream that is generally exempt from the asset testing requirements of the Veterans’ Entitlements Act 1986 (the Act).  The instrument also provides detail in relation to the requirement to provide an annual actuarial certificate to ensure that payments from an income stream are likely to continue for the remainder of the income stream’s term.  Where these guidelines are not satisfied, the income stream would lose its asset-test exemption. The instrument may ultimately affect the rate of pension payable to a person.

 

Human rights implications

 

This Legislative Instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

 

 

 

 

 

 

Repatriation Commission

 

Overview

The Veterans’ Entitlements (Actuarial Certificate – Life Expectancy Income Stream Guidelines) Determination 2013 is a legislative instrument made under the Veterans’ Entitlements Act 1986 (the Act). It was introduced to address the need for clear guidelines on actuarial certificates required for life expectancy income streams, which are exempt from the asset test under the Act. This Determination was enacted by the Repatriation Commission and provides specific guidelines to be followed when determining whether an actuarial certificate is in force and what constitutes a high probability that the provider of the income stream will be able to pay the income stream as required. The policy objective of this Determination is to ensure that income streams are managed in a financially sustainable manner, thereby safeguarding the financial interests of veterans receiving these streams. The Determination replaces the 2009 version and introduces new provisions, including requirements for actuarial certificates to be certified no later than 26 weeks after the start of the relevant financial year and to remain in force for the entire financial year. It specifies that for the purposes of the Act, providers of income streams from self-managed superannuation funds and small APRA funds are considered specified classes of providers. The Determination also sets out guidelines for actuarial certificates, detailing their preparation, timing, and content, and specifies the consequences of not meeting these guidelines. This legislative instrument is not considered regulatory and does not impose additional compliance costs or competition impacts.

Scope and Application

The Veterans' Entitlements (Actuarial Certificate – Life Expectancy Income Stream Guidelines) Determination 2013 applies to entities that provide income streams to veterans under the Veterans' Entitlements Act 1986. Specifically, it applies to providers of income streams from self-managed superannuation funds and small APRA funds, excluding those that are annuity backed. The Determination sets out guidelines for actuarial certificates that must be provided to the Repatriation Commission to ensure that the income stream is likely to continue for the remainder of its term. The Determination outlines the requirements for these certificates, including that they must be prepared according to the Institute of Actuaries of Australia Guidance Note 465, certified within 26 weeks of the start of the financial year, and specify whether there is a high probability that the fund will be able to meet its income stream payments. The Determination also provides that if an actuarial certificate does not certify a high degree of probability, or if it is not provided in a timely manner, the income stream will lose its asset-test exemption, potentially affecting the rate of pension payable to the veteran. The Determination applies on a national level within Australia and does not include any specific exclusions or exemptions. The instrument may be extended or restricted through subordinate instruments, although none are mentioned in the explanatory statement.

Key Provisions

The Veterans’ Entitlements (Actuarial Certificate – Life Expectancy Income Stream Guidelines) Determination 2013 (the Determination) provides essential guidelines under the Veterans’ Entitlements Act 1986 (the Act) for determining whether an income stream is an asset-test exempt income stream. This means that if the income stream meets the criteria set out in the Determination, it will generally be exempt from the asset testing requirements of the Act. Section 1.6 and Section 1.7 specify that providers of income streams from self-managed superannuation funds and small APRA funds, respectively, are considered specified classes of providers. For these providers, a member or trustee of the fund must provide an actuarial certificate to the Commission within the stipulated timeframes. Section 2.1 and Section 2.2 outline the Certificate Guidelines for self-managed superannuation funds and small APRA funds, respectively. These guidelines mandate that the actuarial certificate must be prepared in accordance with the Institute of Actuaries of Australia Guidance Note 465, be certified no later than 26 weeks after the start of the financial year, and specify whether there is a high degree of probability that the fund will be able to meet the income stream payments as specified under the fund’s trust deed or governing rules. The Determination imposes several obligations on the parties it governs. Firstly, the providers of income streams from self-managed superannuation funds and small APRA funds are required to ensure that an actuarial certificate is prepared and submitted to the Commission within the specified timeframes. This certificate must be prepared in accordance with the Institute of Actuaries of Australia Guidance Note 465 and must specify whether there is a high degree of probability that the fund will meet the income stream payments. If the Certificate Guidelines are not satisfied, the income stream will be considered an asset-tested income stream (long term). Additionally, the Determination mandates that the actuarial certificate must be in force for the full financial year (1 July to 30 June) in which it is certified. Breaches of the provisions set out in the Determination can lead to significant consequences. If an actuarial certificate is not certified within 26 weeks from the start of the financial year or is not provided to the Commission within 29 weeks from the start of the financial year, the income stream will be considered an asset-tested income stream (long term). This can potentially affect the rate of pension payable to the individual, leading to financial implications. Furthermore, if the actuarial certificate does not certify that there is a high degree of probability that the fund will be able to meet the income stream payments, the income stream will also be determined to be an asset-tested income stream (long term). These outcomes underscore the importance of compliance with the Determination to maintain the asset-test exemption status of the income stream.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.