With the end of the financial year approaching, pensioners with a self-managed super fund (SMSF) must ensure that minimum pension requirements are satisfied by 30 June.
Government SMSF minimum pension requirements include a standard that the SMSF trustee must pay a minimum amount to each fund member at least once a year. Amounts cannot be transferred between fund members. For example, one member cannot be paid more and the second one less to make up the minimum amount.
The amount you must withdraw depends on your age in the graph as follows:
SUPERCentral gives an example: if your pension account balance was $200,000 as of 1 July 2023 and your attained age was then 76, the specified percentage is 6 per cent. Consequently, for the 2023/24 financial year, you must receive at least $12,000 in pension payments.
It does not matter whether there is only one payment or many payments; it does not matter whether the payments are fortnightly, monthly or quarterly, every six months or only once a year. It does not matter even if there is only one payment – made on 25 June 2024.
What matters is that, in respect of the 2023/24 financial year, at least $12,000 is taken as a pension.
If you’re under 65 you can withdraw between 4 per cent and 10 per cent of your balance each financial year.
The minimum payment is subject to change due to government policy, so it pays to check the limits annually. Visit the ATO website for more information.
If the trustee fails to pay the minimum pension payment, the super income stream will cease for income tax purposes and the ATO will treat the fund as not having paid a super income stream from the start of the income year.
The ATO will make exceptions for honest mistakes, ‘small underpayments’ and circumstances out of your control such as jury duty or unplanned emergency travel.
The ATO defines a small underpayment as one that does not exceed one-twelfth of the minimum pension payment in the income year.
If the underpayment exceeds one-twelfth, you must write to the ATO to explain why you could not make the minimum payment. Each case is considered on its merits.
You should contact the ATO within 28 days once you become aware of an underpayment. If it is due to circumstances out of your control, you should contact the ATO as soon as you can.
Do you have a SMSF? Were you aware of this requirement? Why not share your experience in the comments section below?
Also read: Early dip into super could leave you cold
