Lump Sum or Pension

Discussion in 'Superannuation, SMSF & Personal Insurance' started by davewa, 19th Aug, 2013.

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  1. davewa

    davewa Well-Known Member

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    Hi all,

    For an SMSF member who is over 60, fully retired and in Pension Mode, is there any difference between a Lump Sum payment and a Pension payment?

    Sorry if this question is dumb, but I've been wondering about this one for some time.

    Cheers,
    Davewa
     
    davewa, 19th Aug, 2013
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes.

    Tax for one. Earnings in the fund could be tax free whereas if you take a lump sum and then invest and earn income this could be subject to tax depending on your other income and amounts etc.

    Asset protection is another as is estate planning pre and post death.
     
    Terry_w, 21st Aug, 2013
    #2
  3. davewa

    davewa Well-Known Member

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    Thanks TerryW,

    Sorry I didn't ask my question clearly. What I meant to say was let's say I want to withdraw 30% of my balance. Is there any difference in terms of paperwork for doing it as a lump sum or as a one-off pension payment?

    Regards,
    Davewa
     
    davewa, 22nd Aug, 2013
    #3
  4. greg999

    greg999 Member

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    Good question - don't know the answer.
    Perhaps a lump sum would count towards the asset test for Social Security purposes, if that's relevant to your case (?)

    Greg999
     
    greg999, 13th Sep, 2013
    #4
  5. Andrew Newman

    Andrew Newman Well-Known Member

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    Hi davewa

    Your SMSF accountant should let you know what paperwork you need.

    Just curious, how are the funds invested in your SMSF?

    Kind Regards
     
    Andrew Newman, 17th Sep, 2013
    #5
  6. davewa

    davewa Well-Known Member

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    Hi Andrew,
    Well surely it doesn't matter what I've invested in, so long as I have available cash to pay the pension / lump sum.

    Having recently done a couple of interstate moves, I am in the process of looking for an accountant that I can address such questions too. The recent accountants that have done our annual returns weren't all that knowledgeable about SMSF unfortunately.

    Regards,
    Dave
     
    davewa, 7th Nov, 2013
    #6
  7. Drue

    Drue SMSF Accountant

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    If you are already in pension mode, no additional paperwork is required for the pension payment. Otherwise, pension commencement documents need to prepared and signed. With respect to lump sum payments, it is always a good practice to have a member request and trustee minutes in place.

    For accounting and tax purposes, they are reported differently. But you can leave it with your accountant.

    Hope it helps.
     
    Drue, 8th Nov, 2013
    #7
  8. Andrew Newman

    Andrew Newman Well-Known Member

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    Hi davewa

    How the funds in your SMSF are invested has nothing to do with the pension but I asked this question out of curiosity.

    Kind Regards
     
    Andrew Newman, 8th Nov, 2013
    #8
  9. davewa

    davewa Well-Known Member

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    Hi Drue,

    Yes, that's helpful information.
    Thanks,
    Dave
     
    davewa, 8th Nov, 2013
    #9
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