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SMSF - Regularity of Pension Payments

Discussion in 'Superannuation, SMSF & Personal Insurance' started by davewa, 18th Jun, 2012.

  1. davewa

    davewa Active Member

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    Location:
    Sydney, NSW
    Hi folks,

    Is there anything in the government's rules on SMSF stipulating that pensions must be paid regularly?
    For example could I receive 1% of my balance in July, plus 1% in October, and nothing for the rest of the year? (That would meet the current requirement for me to receive at least 2% per financial year, for SMSF pensioners under 65)

    My Trust Deed just says "the Trustees will ... determine the amount of the pension and the manner in which and the period for which it is paid" but also mentions the usual "must comply with the Act" condition, and "must be paid at least annually".

    Thanks,
    Davewa
     
  2. funkandjunk

    funkandjunk Member

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    hi you would find that in sis regulations, the requirements say that you just need to make an annual pension payment. SIS regulations do not prescribe the frequency of the pension payments. please note that in the current year and the next financial year the mininum is actually 3 percent
     
  3. davewa

    davewa Active Member

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    Location:
    Sydney, NSW
    Thanks Funkandjunk,

    OK with the frequency - eg monthly, quarterly or annually, but more exactly I want to ask about is the regularity. ie can I receive 1.5% in July, 1.5% in October and nothing for the rest of the year?

    Thanks,
    Davewa
     
  4. funkandjunk

    funkandjunk Member

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    Yes as long as you make at least onepension payment in the FY, it is up to you how you take it. In a SMSF easily done but in a retail fund, payment options are bound by their rules.
     
  5. davewa

    davewa Active Member

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    22nd May, 2011
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    Sydney, NSW
    Thanks Funkandjunk,

    That's good. It fits in better with my term deposits, etc.

    Cheers.
     
  6. Superman

    Superman Well-Known Member

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    Location:
    Gold Coast, QLD
    Yes - at least 1 payment per year.

    I prefer my clients to set up a monthly payment / automatic DDR rather than drawing ad hoc.

    Importantly, I always ensure they know if they make addition contributions (and subsequently commence additional pensions), they need to talk to me so we can re-calculate the monthly payments.

    SMSF members can get in trouble where they take the minimum % for the year, but based on the timing they may not take enough between when the pension starts (if part way during the year) and the end of the financial year.

    Important to remember the above.

    SM ;)
     
  7. davewa

    davewa Active Member

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    Sydney, NSW
    Thanks SM,

    Regards,
    Davewa
     
  8. davewa

    davewa Active Member

    Joined:
    22nd May, 2011
    Posts:
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    Location:
    Sydney, NSW
    Regularity of Pension payments

    Hi all,

    Just want to revive this old thread. I just found this on ATO website (see Self-managed superannuation funds - starting and stopping a superannuation income stream (pension) )

    A super income stream exists when all of the following apply:

    * a member is entitled to a series of payments that relate to each other
    * the payments are periodic, whether paid annually or more frequently
    * the payments are made over an identifiable period of time
    * the...


    Does this mean the payments must be exactly periodic - eg $3000 each month.
    Can it not be for example $20,000 in July, $16,000 in October and nothing for the rest of the year? (so long as the minimum and maximum totals are as stipulated by ATO).

    For retirees past 60 years old is there any difference between a pension payment and a lump sum withdrawal?

    Thanks for any help.
    Davewa