Clever Interpretation No 1 - When "reserve" does not mean "reserve".

An asset will be segregated when the asset is “invested, held in reserve or otherwise dealt with” to support its liabilities in respect of superannuation income streams.

An asset will be invested, for the purposes of the Determination, when it is actually producing income (eg dividends, trust distributions, interest payments or rent).  

An asset will be “held in reserve” when the asset is not currently producing income – for example real estate which is currently untenanted.  An asset is not held in reserve when it is used to support an investment reserve or a pension reserve (to deal with mortality risks for non-account pensions).  

This interpretation of “held in reserve” permits the ATO to exclude investment and other reserves from the benefit of the pension liabilities income exemption.

For completeness, the Determination provides that an asset is “otherwise dealt with” when the asset is not invested or held in reserve.  The example is given of securities which are subject to a securities lending arrangement: essentially an optional buy back arrangement.