Q&A: Do I have to take my SMSF pension as regular payments?

Q: I have an SMSF fully in pension phase. I am aged 70. I need to withdraw a minimum of 5%. I would have preferred to take this as a lump sum towards the end of each financial year, but my new accountant says I should take it as a regular payment spread out over the financial year. She said the ATO prefers this. I had been under the understanding that for the withdrawal you had a choice, either a lump sum or a regular pension payment. Is there a choice in my situation and if so, what are the pros and cons between each option?

A: In order for a pension to exist, in other words, in order for us to get all the tax benefits to go with a pension, not only do we need to establish it correctly, we need to also make sure that the ongoing pension standards or the ongoing pension rules are met each and every year. These pension standards are contained within the legislation, so they’re hardwired in there, and they must be met, each and every year.