Guest contributor: Meg Heffron, the author of this article, is co-founder and a Director of Heffron SMSF Solutions – a firm that specialises in SMSFs. She is a qualified actuary with more than 25 years of superannuation experience. We are thrilled to have Meg contributing to SuperGuide, and sharing her knowledge and ... Read more
SMSF pensions
A member of an SMSF can choose from only two types of pensions – an account-based pension or a transition-to-retirement pension (what we call a ‘TRIP’). (If you retired before 20 September 2007 however, you may be receiving another type of pension from your SMSF.)
An account-based pension gives you unlimited access to your account balance but how long your money lasts depends on the investment returns that your pension assets deliver, and the amount you withdraw each year. You also must withdraw a minimum amount each year, based on your age. You must follow special rules when running a SMSF pension, including minimum pension payments and reporting exempt current pension income (see SuperGuide section Retirement phase (formerly called Pension phase)) .
If you plan to run an accumulation account and a pension account within your SMSF, then you need to segregate the assets supporting the SMSF pension, or obtain an actuarial certificate.
Note: You can also arrange for your account-based pension to be paid as a reversionary pension to your spouse after you die.
For more detailed information on SMSF pensions, see the following SuperGuide links:
- Retirement phase (formerly pension phase)
- Types of super benefits
- Starting an SMSF pension
- Minimum super pension payments
- Transition-to-retirement pensions
- $1.6 million transfer balance cap
- Actuarial certificates
For more information on SMSF pensions see the following SuperGuide articles:
Set out below are all SuperGuide articles referring to SMSF pensions.
Compliance alert! 85% of SMSFs exempt from quarterly event-based reporting
Note: From 1 July 2018, SMSFs must report events that affect a fund member’s transfer balance to the ATO on an events basis (which the ATO has since confirmed must be reported quarterly if a SMSF has a fund member with a total superannuation balance of $1 million or more). The SMSF trustee must report this event using ... Read more
SMSF asset valuations: Why the ATO is taking greater interest
In recent speeches, ATO representatives have highlighted the increased importance of SMSF asset valuations since the introduction of the July 2017 super changes. SMSF asset valuations have been a compliance requirement for many years. According to the ATO, the ATO’s valuation guidelines for SMSFs continue to apply ... Read more
Defined benefit pensions and the $1.6 million transfer balance cap
Every Australian entering retirement phase with superannuation benefits, now needs to monitor his or her very own retirement cap. Since 1 July 2017, the $1.6 million transfer balance cap represents the maximum amount that you can transfer to retirement phase to support a super pension. The transfer balance cap will be ... Read more
CGT relief and the $1.6 million transfer balance cap, and TRIPs
Note: If you are claiming the CGT relief, you must apply for the temporary relief BEFORE you lodge your super fund’s 2016/2017 tax return. The ATO has extended lodgement date for the 2017 SMSF returns until 30 June 2018. The CGT relief is available if the asset/s involved were owned by the SMSF were held continuously ... Read more
Retirement phase: A super guide to the $1.6 million transfer balance cap
Since 1 July 2017, a cap of $1.6 million has been imposed on every Australian, limiting the amount of super that can be transferred into retirement phase (what we previously called pension phase). Although the transfer balance cap will be indexed in $100,000 increments, the transfer balance cap for both the 2017/2018 ... Read more
Tax-deductible super contributions: Timing start of pension is essential
Q: I put money into my SMSF in June 2017 from a capital gain. I wasn’t able to tell the fund at that time what it was because my accountant hadn’t completed the figures so that notice was sent to them in August 2017. As I understood the rules, so long as the money was in the fund at June 2017, I could then withdraw any ... Read more
Superannuation death benefits and the $1.6 million transfer balance cap
We have received many questions from readers about how the new $1.6 million transfer balance cap will operate when a fund member dies, especially if the fund member has arranged for his or her spouse to receive a superannuation death benefit pension, including a reversionary pension. This article provides a brief ... Read more
Total Superannuation Balance: 7 reasons why your TSB matters
Saving for retirement in Australia has become a lot more complicated since July 2017. The federal government has cut the annual contributions caps and has also restricted the amount of money you can transfer to retirement phase. For Australians with large superannuation balances, the federal government has also ... Read more
SMSF pension: What happens if I don’t withdraw the annual minimum pension payment?
Q: I have my own super fund and when it came to the end of the year I was supposed to withdraw $22,000. I only withdrew $12,000 and I can catch up this year. Is this a reportable breach to the Tax Office? For the benefit of other SuperGuide readers, I’ll first explain the background to your question. I assume that ... Read more
Super pensions: Is there an upper limit to how much we can withdraw?
Q: I am aware that the minimum amount of super pension withdrawal is 4% (for under 65s) of the pension account balance. Is there now any MAXIMUM amount of pension required to be drawn from a super fund? If no maximum payment is required, is this still the case for account-based pensions, transition to retirement ... Read more
Retirement and tax: What are the minimum pension payment rules?
Q: I am 63. I want to retire next year but I am not sure if I want to access my super benefits yet. I have heard that when I retire, I must withdraw some super benefits each year, otherwise I won’t receive tax-free super benefits. Can you please clarify the rules for me? A: Your question is really four questions in ... Read more
