SMSF pension: Can I still make super contributions?

Q: I am 62 years of age and retired. I have recently commenced an account-based pension from my SMSF. Can I still make non-concessional contributions to that fund?

A: I have divided your question into three parts.

  1. Can someone who is 62 years of age and retired, continue to make super contributions?
  2. Can an individual who has started an SMSF pension, make super contributions to that SMSF?
  3. How are the super contributions taxed, compared with the pension account?

1. Can someone who is 62 years of age and retired, continue to make super contributions?

You can make voluntary concessional contributions (subject to eligibility) and/or non-concessional contributions to a super fund until the age of 74 (or, strictly speaking, after 75 but only if the contribution is recorded by your fund within 28 days after the month that you turned 75).

You need to be mindful of the following requirements:

  • If an individual is aged 65 or over, then they must satisfy a work test to be able to make super contributions. The work test involves the following: you must be gainfully employed for at least 40 hours in a consecutive 30-day period in the financial year in which you make the super contribution. For more information on the over-65s work test, see SuperGuide article Over-65s work test: How does it operate again?
  • Anyone aged 64 or under, can continue making super contributions to a super fund, even when retired, without having to satisfy a work test. 

Note: If you’re eligible, your employer must continue making compulsory superannuation contributions (Superannuation Guarantee) beyond the age of 75. For more information on SG requirements, see SuperGuide article Super contributions beyond the age of 75.

2. Can an individual who has started an SMSF pension, make super contributions to that SMSF

The short answer is ‘yes’. If a self-managed super fund (SMSF) member is in pension phase, for an SMSF to be able to accept super contributions, then a separate accumulation account MUST be opened within the SMSF to accept those super contributions. A pension account cannot accept super contributions.

Background: Your SMSF can have two distinct phases — accumulation phase and pension phase — that can operate concurrently or at separate times. When you’re contributing to a super fund, those contributions are recorded in your member account and then invested in assets. In these circumstances, your member account is in accumulation phase. You may choose to make regular contributions to your accumulation account, or you can also have your account in accumulation phase even when you’re not making super contributions. I usually describe the accumulation phase as: “When you’re not taking a pension from a super account.” When you are withdrawing a pension (also known as an income stream) from a member account, then that account is in ‘pension phase’.

Note: A super account cannot be both in accumulation phase and pension phase, but you can have 2 super accounts within a SMSF, one in accumulation phase and the other in pension phase. You can have more than one super account in pension phase within a SMSF, although you can only have one super account in accumulation phase.

3. How are the super contributions taxed, compared with the pension account?

The key difference between the accumulation phase and the pension phase is the tax treatment of fund earnings. In pension phase, fund earnings on assets, including any capital gains that your fund receives on the sale of pension assets, are exempt from tax.

In contrast, earnings on assets in accumulation phase are subject to 15% earnings tax, although capital gains may receive a 33% tax discount (an effective tax rate of 10% on capital gains).

If you choose not to draw a pension from your SMSF and leave your super benefit in accumulation phase indefinitely, then the 15% earning tax will also apply indefinitely.

SUPER ALERT! Earnings on fund assets in pension phase are exempt from tax, and will continue to be so beyond 30 June 2017, with one major exception. From 1 July 2017, the earnings on assets financing a transition-to-retirement pension (TRIP) will no longer be exempt from tax, subject to legislation (see SuperGuide article Less tax, more super? A transition-to-retirement pension may no longer be the answer). Also, from 1 July 2017, Australians can transfer no more than $1.6 million into pension phase, subject to legislation (see SuperGuide article Liberals to impose $1.6 million cap on pension start balances).

Note: Tax-exempt pension earnings are a different concept from tax-free super benefits paid from a super fund on or after the age of 60. Tax-free super benefit payments for over-60s is separate and in addition to tax-exempt pension earnings. Individuals under the age of 60 who are receiving a super pension will still be able to enjoy tax-exempt earnings on pension assets, but the taxable component of any super benefits paid from that super account will be subject to benefits tax. For more information on tax and super, see SuperGuide article Super for beginners, part 15: Super tax – as easy as 1-2-3.

Important: If you receive a pension from your SMSF, and you also want to open an accumulation account, then you must decide whether to segregate the assets financing the SMSF pension, from the assets representing your SMSF accumulation account. Earnings from assets that are financing a SMSF pension are exempt from tax, which means the ATO wants to ensure that only earnings on those assets financing such a pension (rather than other fund assets) receive tax exempt status. If you don’t segregate your pension assets from your other fund assets, then your fund must obtain an actuarial certificate for each year. The actuarial certificate is produced by an actuary and identifies the percentage of earnings that relate to tax-exempt income financing the SMSF pension. Note that the 1 July 2017 changes referred to earlier, will also impose stricter requirements on segregated assets.


  1. hi trish
    i am totally confused
    i am 57 & retired & i do not want to work full stop. my accountant has told me that i cannot make contributions to my smsf when i am 60 as i have stopped work
    you seem to say you can till 65
    regards robin

  2. John Allen says:

    I set up our SMSF in Sep 08 using professional documentation and engaged a local accountancy firm to prepare the tax returns and obtain an independent audit. The latter was provided by the accountant’s partner. I put my account into pension phase almost right away and made a small non-concessional contribution each year, usually $1,000 at the end of June, 09 and 11, but one contribution was of $4,500 in August 2009, the fund going on to make a good profit that year. (I satisfied the work test each year). My accountant merged all of these contributions with my pension account without obtaining any actuarial certificates or establishing an accumulation account to receive them. After reading your excellent column and researching ATO & SISS I broached him about it. At first he assured me it had all been done correctly, then admitted they were not, but refused my request that he re-submit corrected returns to ATO with full disclosure right away, preferring to await advice from the new auditor who will perform this task, in place of his partner, as of 2011/12 year onward, advice which may be received some time in the future or not, but I don’t believe he/she will have the authority to advise other than full and immediate correction or is my accountant right in saying that the amounts are so small it doesn’t matter? Your opinion on that would be most helpful.

  3. I am wondering if you have any discussions on WRAP products. It appears they are becoming more popular. I know my Superannuation Fund with Onesource is changing to Wrap Super. Is this a good thing. Apparently my financial advisor tells me it won’t affect me. But I would like to read something about them from you, or can you direct me to some reading in a previous article.
    Thank you

Leave a Comment