When a superannuation account enters pension phase, the earnings on assets financing the super pension are exempt from tax, subject to meeting minimum pension payment rules. What this means is that capital gains, dividend income, interest income and any other type of income that the super pension account receives is ... 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. A transition-to-retirement pension (TRIP) is available to those who have reached preservation age (at least age 55 or 56), but have not retired from the workforce. You can also arrange for your account-based pension to be paid as a reversionary pension to your spouse after you die.
You must follow special rules when running a SMSF pension, including minimum pension payments and reporting exempt current pension income. 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.
For more information on SMSF pensions see the following SuperGuide articles:
Set out below are all SuperGuide articles referring to SMSF pensions.
Estate planning: How can a SMSF live forever?
Q: It has been suggested, that a family self-managed super fund (SMSF) can become a multi-generational tax haven, which can go on into perpetuity, provided that you establish a special corporate trustee, as well as a SMSF Will. I thought that the super money could not remain in the fund indefinitely because eventually ... 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
Burden for retirees: Monitoring $1.6 million transfer balance cap
Effective from 1 July 2017, for every Australian, a cap of $1.6 million will be imposed on the amount of super that can be transferred into retirement phase (what we currently call pension phase). For Australians in pension phase before July 2017 and who will have more than $1.6 million in super pension accounts as at ... Read more
SMSF trustees face bigger penalties from 2017/2018 year
SMSF trustees can expect harsher fines from the next financial year (2017/2018 year) onwards with administrative penalties of up to $12,600 per trustee (including corporate trustee) for a breach of the super rules. A value of a penalty until will increase to $210 (from the current $180) from 1 July 2017.At the time ... Read more
Super loophole 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 July 2017 change, a small but important loophole has been missed by the super experts.Many ex-politicians and most retired senior bureaucrats, who are aged under 60, will ... Read more
Anti-detriment payments banned from July 2017
Note: This change is now law receiving royal assent on 29 November 2016, and taking effect from 1 July 2017.On 3 May 2016 (2016 Federal Budget), the Coalition government announced that it would abolish the anti-detriment provisions from July 2017, and this change became law on 29 November 2016.From 1 July ... Read more
Defined benefit pensions and the $1.6 million transfer balance cap
Every Australian entering retirement phase with superannuation benefits, will now need to monitor his or her very own retirement cap. From 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.If you belong to a defined ... Read more
CGT relief and the $1.6 million transfer balance cap, and TRIPs
If you have more than $1.6 million of superannuation in pension phase, or you expect to have more than $1.6 million in pension phase by July 2017, then you need to start planning for some serious decision-making. Anyone with more than $1.6 million of super in pension phase as at 1 July 2017, will be forced to withdraw ... 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
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 $11,000. I only withdrew $6000 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
