Pensions – What are the Basics in Self-Managed Super?

Pensions – What are the Basics in Self-Managed Super?

Pensions – What are the Basics in Self-Managed Super?

The Australian Tax Office (ATO) is the regulator of self-managed super funds (SMSF), and enforcer of the law.

Commencement of a pension officially begins when?

The commencement day of an SMSF pension is the first day of the time period to which the first payment of the pension relates. This will generally be determined by the date set by Trustees as the day the pension starts as well as the governing rules of the fund. For pensions that commenced before 1 July 2007, they must continue to be paid under the previous pension payment standards unless the pension is an allocated pension. With allocated pensions, one can choose to start paying them under the minimum standards any time after 1 July 2007, without having to commute and start a new pension, as long as this is allowed by the rules of your fund. For pensions that commenced between 1 July 2007 and 19 September 2007, you can choose to pay the pension under the previous or the new pension rules, provided it is allowed by the rules of your fund. All pensions that commenced after 19 September 2007 must meet the minimum pension standards. Allocated pensions are generally now called Account-Based pensions. An account-based pension refers to a pension where an account balance is attributable to the member. That means, the amount supporting the pension must be allocated to a separate account for each member.

Minimum Pension Amounts mean?

The minimum amounts or standards mean that the super pensions paid must meet all of the following requirements:

1.   The pension must be account-based, except in limited circumstances;

2.   You must pay a minimum amount at least annually, stipulated by law see HERE;

3.   You cannot increase the capital supporting the pension using contributions or rollover amounts once the pension has started;

4.   A pension being paid to a member who dies can only be transferred to a dependant beneficiary of that member;

5.   You cannot use the capital value of the pension or the income from it as security for borrowing;

6.   Before you can commute a pension, you must pay a minimum amount in certain circumstances.

There are no maximum draw-down limits for pensions commencing after 19 September 2007, except for transition-to-retirement income streams.

For more examples and more details, see the ATO site HERE

Get our FREE Expert Guide – Self-Managed Super and You – it has all the info you need to know and checklists to determine if SMSF is for you and what steps are needed to set up. It also gives you ALL the Aust Tax Office publications about SMSF (NAT XXXX). Get you copy now – click “Download” top right hand side above. You’ll also get monthly SMSF news, investment teaching and upcoming seminar and workshop briefs! Download your FREE Guide now!

Advertisements

About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
This entry was posted in 2 Past Newsletter Topics, Pensions / Income Streams, Retirement Planning, SMSF Info, News & Stats, Superannuation General and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s