This article will outline how to process a Non-Commutable Income Stream (NCIS) that results from Insurance Proceeds in an event such as Temporary Incapacity.
This includes recording the proceeds received from insurance policies, the payments made to the member, and ensuring these payments are recorded as an income stream.
In Simple Fund 360, this NCIS can be recorded as payments from an Accumulation or a renamed TRIS account depending on how you wish for this Income Stream to be represented.
The proceeds resulting from the insurance policy should be recorded to 27500/Proceeds from Insurance Policies, adding the balance to the member's Accumulation account. From here, the following options are available for recording the Income Stream:
- Record the payments to the member as a Debit to 46000/Benefits Paid / Transfers Out.
- After creating entries to 30 June, these will be recorded as Lump Sum Payments on the Tax Return. Ensure the amount paid out for the NCIS is manually adjusted from R1: Lump Sum Payment to R2: Income Stream Payment.
- Ensure the correct code is selected for the Income Stream payment on the Tax Return:
- Create a new Transition to Retirement Pension account.
- After creating this account, select it via the Member List screen and change the Account Description as desired:
- Record the payments to the member as a Debit to 41600/Pensions Paid. Note that there will be a warning stating the 10% maximum pension payment cap is being breached, please ignore this warning when it occurs.
- After creating entries to 30 June, ensure the correct code is selected for the Income Stream payment on the Tax Return: