Pension payment standards for transition to retirement pensions


Wednesday 19 November 2014

The Australian Taxation Office (ATO) has released a determination outlining whether a commutation from a transition to retirement pension paid from a self managed superannuation fund (SMSF) counts towards the annual minimum and maximum pension payment amounts.

Transition to retirement pensions can only be commuted in limited circumstances, including:

  • cashing an unrestricted non-preserved benefit
  • paying a super contributions surcharge
  • paying an entitlement under a payment split to a non-member spouse
  • making a payment under a relevant release authority
  • satisfying an obligation to pay to the ATO an amount in relation to the unclaimed superannuation of former temporary residents

The ATO's view is that, where an SMSF makes a partial commutation to a member and this amount is not rolled over within the super system, the commutation amount will count towards the minimum pension requirements. However, the payment will not count towards the maximum pension amount permitted to be paid.

A payment made as a result of a full commutation of a transition to retirement pension will not towards either the minimum or maximum annual pension amounts as the ATO’s view is that the pension ceases before the payment is made.

Further information

ATO Self Managed Superannuation Funds Determination ATO SMSFD 2014/1 Self Managed Superannuation Funds: does a payment made as a result of a commutation of an account based pension that is a transition to retirement income stream count towards the minimum and maximum annual payment amounts set out in the SIS Regulations for such a pension?

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