Estate planning is often overlooked or neglected by superannuation investors. A broad and complex topic, it can be made easier by breaking down the key elements. This article won’t address all financial and legal issues in depth, especially for non-super assets. Instead, in the context of SMSFs, we will highlight ... 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.
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Guide to SMSF administration, reporting and record-keeping
SMSF trustees have a number of administrative, reporting and record-keeping obligations to ensure their fund’s compliance with superannuation and taxation legislation. Compliant super funds are eligible for the tax concessions available under Australian superannuation law. Member contributions and fund earnings for ... Read more
Guide to SMSF trust deeds
An SMSF trust deed is a legal document that outlines how the fund will be set up and how it will operate. An Australian SMSF must be established with a trust deed that is compliant with Australian superannuation legislation. Why is an SMSF trust deed necessary? An SMSF must be set up as a trust. A trust is a type of ... Read more
SMSF compliance for super beginners
Your responsibilities as a self-managed super fund (SMSF) trustee are directly linked to superannuation law, tax law, corporations law or trust law. Generally, SMSF trustees must consider at least 9 super compliance must-dos. If you run an SMSF, you must follow the super laws and tax laws in particular, or risk ... Read more
SMSF compliance: Is your fund due for a super service?
Read this article to discover the rules in place for SMSF trustees, and discover what you can do to ensure your SMSF operates within the super laws. If you run an SMSF, then you belong to an influential group that controls a third of all superannuation money held in Australia, and collectively owns around over 14% ... Read more
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SMSFs: The 12 most common mistakes made by trustees
In a recent speech, ATO Assistant Commissioner Dana Fleming outlined the 12 most common mistakes made by SMSF trustees. Ms Fleming acknowledged that most SMSF trustees do the right thing and “operate within the rules and regulations”. She stated that individuals who choose to set up an SMSF must understand the ... Read more
Retirement: What types of superannuation pensions are available?
The most popular type of superannuation pension is an account-based pension, which is also the main type of super pension available to retirees. The technical term for a superannuation pension is a ‘complying pension’ (that is complying with the superannuation rules). ... Read more
SMSF pension: After making super contributions, when can I convert to another pension?
Q: I am 67 and work part time, so I qualify to make concessional (before-tax) contributions to our SMSF. I am already receiving an account-based pension from my SMSF. The new contributions I make will have to go into an accumulation account. How long do I have to wait before our SMSF can pay another account based ... Read more
SMSF pension: How do I start one?
Q: How do you change your self-managed super fund (SMSF) from accumulation phase to retirement phase (husband aged 60, and retired) and transition-to-retirement pension phase (myself aged 57 and still working part time)? If an accountant has to do it, what costs could be involved? Your site has been a great help in ... Read more
I’m retired. If I return to work, what happens to my SMSF pension?
Q: My husband turns 60 in January. We have an SMSF and he is going to commence retirement phase. He is essentially retired and only worked 4 hours this financial year. But what if he decides to work again in six months’ time? The account-based pension allows for lump sum withdrawals which is very advantageous and would ... Read more
Turning 65 and super: A Super Guide
Anyone aged 65 or over can access super benefits without retiring or satisfying any other special condition of release. Turning 65 is a condition of release. Unless you’re in a public sector fund, such super benefits will be tax-free when paid on or after the age of 60. For a general summary of the super and ... Read more
Super loophole still benefits politicians and senior public servants
Amid the confusion surrounding the $1.6 million transfer balance cap on super pensions, and the short timeframes available to comply with this change (which took effect from July 2017), a small but important loophole was missed by the super experts, and continues to be ignored by the superannuation lobby groups, and ... Read more
Tax-deductible super contributions: Timing start of pension is essential
Q: I put money into my SMSF in June 2018 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 2018. As I understood the rules, so long as the money was in the fund at June 2018, I could then withdraw any ... Read more
Super for beginners, part 27: Tax-free super when I start a pension just before turning 60?
Q: I turn 60 in May 2019. Is the compulsory 4% drawdown from my super pension treated on a pro-rata basis for my tax return for the 2018/2019 year, or can I draw it down after May 2019 rendering my super income after 60, and then tax-free? You ask a popular question relating to tax-free super for over-60s, and the ... 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