Types of Pension
Current Pensions: Account Based Pensions and Transition to Retirement Income Streams.
Grandfathered Pensions:
Account Based pensions (Allocated pensions) started before 1st January 2015 are grandfathered from the Centrelink deeming provisions, therefore the Centrelink impact should be considered before any changes are made to these pre 1st January 2015 pensions.
Term Allocated Pensions (also called Growth or Market Linked).
Defined Benefit Pensions:- Lifetime and Complying or Flexi pensions can no longer be started, however, if they started before the legislation changed, they can continue.
Commencing a Pension
Commencing a pension from a SMSF requires a substantial amount of compliance documentation. With an increasing focus on compliance from the Australian Taxation Office and Centrelink (if applicable) it is imperative that pensions are established correctly. To correctly set up a pension requires more than merely setting up a periodic payment from your SMSF to a personal bank account for the pension payments.
| NEED | Decide to commence pension drawdown |
| DECIDE | Account based pension (retired) |
| Transition to retirement (Still working and over 56) | |
| STRATEGY | Perform any strategies (eg. recontribution) |
| Make further contributions | |
| UPDATE | Super Plus updates fund accounts and determines member balances |
| INSTRUCT | Instruct Super Plus on the pension details: Start date, Reversionary, full or part member balance |
| MINUTES | Super Plus arranges necessary fund minute and other pension documents |
| DRAW | Draw your pension: monthly, quarterly, annual, adhoc (minimum must be drawn in the financial year) |
| REVIEW | Super Plus completes year end review of pension |
| ENJOY | Enjoy your pension income, knowing the compliance work has been taken care of |
Ongoing Pension Management
It is important that the pension is monitored and reviewed on a regular basis. The ongoing operation of a pension paid from a SMSF will require liaison between:
- Fund administrator
- Fund auditor
- Fund actuary
- Australian Taxation Office
- Centrelink/Department of Veteran Affairs
- SMSF trustees and members
If your SMSF is not receiving a regular administration service, it possible your pension fund is not meeting the minimum statutory reporting obligations which may also affect any entitlements you receive from Centrelink and DVA.
In addition to the normal aspects of operating a SMSF, for funds with pensions, we perform these additional, but vital functions:
- Annual review of pension payment and level
- Trustee minutes (if applicable)
- Actuarial Certificates (if applicable)
- PAYG Summaries & Statement (Not required for payments after age 60)
- Amendments to periodic payments for pensions
