Legacy Pension Amnesty: A Five-Year Window to Exit Older Superannuation Pension Products

Aditi Sarkar

29 October 2026 09:03 PM AEDT

Legacy Pension Amnesty: A Five-Year Window to Exit Older Superannuation Pension Products

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Highlights

The legacy pension amnesty opened 7 December 2024 and closes 6 December 2029, giving a five-year exit window.
Commutation under the amnesty must be a full commutation; partial exits are not permitted under the regulations.
The trust deed may need amending before a commutation can proceed, adding a preparatory step for some funds.
Commuted amounts become subject to assets and income testing under social security, which affects means-tested payments.

Members of SMSFs holding legacy pension products, including market-linked and defined benefit pensions established under older rules, now have a five-year window to commute those products. The amnesty was enacted under the Treasury Laws Amendment (Legacy Retirement Product Commutations and Reserves) Regulations 2024 and runs from 7 December 2024 to 6 December 2029.

What the Amnesty Allows

The amnesty enables the full commutation of legacy pension products that members would not otherwise be able to exit under the ordinary rules applying to those older products. Commutation converts the pension entitlement back into an accumulation interest, which can then be managed differently or used to commence a new account-based pension.

Only full commutation is permitted. The regulations do not provide for partial commutation of a legacy pension product under the amnesty. Members who want to exit must exit the entire product.

Trust Deed Check Required First

Before proceeding with a commutation, trustees must check whether the fund's trust deed permits it. Some older trust deeds may restrict or not contemplate commutation of legacy products. If the deed does not allow it, an amendment will be required before the commutation can validly proceed. This is a preparatory step that can take time and should be addressed well before the December 2029 deadline.

Social Security Consequences

Meg Heffron has noted that older members may not benefit from the amnesty, depending on how far through the pension term they are. A key consideration is social security. Once legacy pension amounts are commuted back into accumulation, those funds become subject to the assets test and income test for social security purposes. Members receiving income support payments who currently hold legacy pensions may face a reduction in those payments if they commute.

FAQs

Q: When does the legacy pension amnesty close?

A: The amnesty closes on 6 December 2029. It opened on 7 December 2024, giving a five-year window.

Q: Can a member commute only part of a legacy pension under the amnesty?

A: No. The amnesty only permits full commutation. Partial commutations of legacy products are not available under the regulations.

Q: What should a trustee check before commuting a legacy pension?

A: The trust deed must be reviewed to confirm it permits the commutation. If the deed does not allow it, an amendment is required before the commutation can proceed.

Q: Does commuting a legacy pension affect a member's social security entitlements?

A: Yes. Commuted amounts are returned to accumulation phase and become subject to the assets test and income test under social security, which can reduce means-tested payments.

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