How Do You Tell the Difference Between a Commutation Payment and a Large Pension Payment?

On the basis of the Draft Ruling, a commutation is the conversion of future pension payments to a currently payable lump sum.  This requires the pension documents to specify with some detail those future pension payments.  If the pension payments are not specified, then it is not possible to commute them, so the argument would run.

In future, if you wish to preserve the right to commute the pension, pension documents will have to specify in detail the regular pension amount: this would involve specifying the frequency of pension payments (eg annually, half-yearly, quarterly, monthly) and the amount of the pension payment (eg minimum statutory amount or, say, $20,000 pa).

If pension documents do not specify with sufficient precision the payment frequency and payment amount, it will not be possible to commute the pension, as there is no means of distinguishing a large pension payment from a commutation of future payments of the pension.