An Account Based Pension can be started when you are retired and reached the preservation age or reached 65 years of age. This type of pension account allows you to have unlimited access to your superannuation benefits. There are certain minimum amounts which have to be withdrawn on an annual basis for the Account Based Pension to retain its tax-free status.
A pension has the character of regular payments. These payments can be once a year, on a monthly, quarterly or other regular basis. The difference between a pension and a lump sum amount is that a lump sum is paid as a once-off payment.
- Minimum amount calculated on 1 July each year for the transition to regular retirement payment
- In the first year of the account-based income stream, work out the minimum payment pro rata on effective days in the year
- Minimum amount to be rounded up to the nearest $10
- These minimum amounts are set out in the Superannuation Legislation (click on the link for the legislation)
The ATO also has a video explaining how a Member can start to pay benefits to themselves and what conditions they need to meet in order to make income stream payment. Please see the video below.
SMSF paying an income stream
Trustees must minute their decision to start a Pension so that it can come into effect. Use this Trustee Minutes template to document your decision. There are many more documents available for download from our FREE DOWNLOADS section.