Posting 100+ pension payments across 8 pension accounts

Hi all,

I’m working on a SMSF that has had over 100 pension payments during the 2018FY.

If there was only one member and only one pension account I would simply allocate each payment to the 41600 account (perhaps via a bank rule).

However, the fund has 8 pension accounts across 2 members. I obviously don’t want to allocate each payment across 8 members. I would also prefer not to post certain payments to certain pension accounts.

Does anyone have any suggestions?

Thanks

You should setup a rule to automatically split each pension payment to all 8 member accounts - I normally would split them by working out a weighted average over the total pension.

Thanks for the suggestion

I have a few funds with the same situation. I use the Pension Data Clearing Account #94930 for the rule and journal at the end of the year/ period as needed. This way you can allocate payments in a tax effective way and create lump sum commutations if its above the minimum.

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I would be posting them to a ‘clearing account’, then working out which ones might belong specifically to a certain pension account and moving those there. Then the remainder can be allocated by working out what payments are needed to take each pension up to the minimum; and then usually the remaining amounts are allocated to the pension account with the highest taxable component
(nb this should be documented/agreed to by the member/s before the payments were made).
I prefer to post the payments directly to the member rather than doing journals at this point.
We have a standard letter for members to be advised of their minimum pensions for the year, and this letter has a section for dealing with amounts above the minimum pension. The client signs the letter to confirm they’ve been advised of the minimum, and to instruct how excess amounts are dealt with.

But the weighted member balance at the year-end would be inaccurate.

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I am of the impression that BGL uses daily weightings - in which case journalising amounts ‘at year end’ would give the wrong weightings in comparison to recording the pension payments on the actual dates they occur.

That’s correct. BGL uses the daily weighted average balance when allocating profit, therefore a journal at 30 June to allocate pension payments would almost certainly lead to the wrong allocation of profit.

An update on the situation: I was going to post to the pension clearing account (94930), however you can’t create a bank rule with a suspense/clearing account. I really needed to create a bank rule given there were something like 120 pension payments, so I created a dummy bank account and used that for the bank rules, so all transactions were posted there. Then at the end of each month I cleared that account and allocated pension payments across the 8 pension accounts.

Next time I’ll create a different asset account to use as a clearing account, so that the cash flow statement isn’t affected (not that we issue one but thought I should not use a dummy bank account).

DR 91000 Bank Data Clearing Account
CR 60400 Cash at bank
If all the transactions have been recorded this way, setting up a pension allocation rule should work fine.