John has a reversionary pension worth $1 million at the time of his death on 1 August 2017. The pension reverts to John’s wife, Heather. Heather already has her own pension and a transfer balance account balance of $800,000.
Unless Heather acts within 1 year, the combined value of the two pensions will cause her to breach her transfer balance cap. Heather can fully commute either pension or she can undertake a partial commutation for the amount of the potential excess, $200,000.
On 31 July 2018, Heather makes a partial commutation of her pension and receives a superannuation lump sum of $200,000. On that date, a debit arises in her transfer balance account for that amount bringing her transfer balance account down to $600,000.
The $1 million credit in respect of the reversionary pension arises in Heather’s transfer balance account on 1 August 2018. Heather has not breached her transfer balance cap
| Detail | PB | TBA | PTBC | GTBC |
|---|---|---|---|---|
| Heather’s Pension @ 1/8/2017 | $800,000 | $800,000 | $1,600,000 | $1,600,000 |
| When Reversionary Pension is Included | $1,800,000 | $1,800,000 | $1,600,000 | $1,600,000 |
| After $200,000 Commutation | $1,600,000 | $1,600,000 | $1,600,000 | $1,600,000 |
