Your superannuation benefits in your SMSF is normally preserved benefits until you meet a condition that allows for those superannuation benefits to be paid to you. These are the conditions of release.
Common conditions of release for paying benefits are:
The payment of superannuation benefits may be in the form of an income stream (pension) or a lump sum, depending on the circumstances.
Reaching preservation age and still employed allows a member to commence a transition to retirment income stream (TRIS). A TRIS is subject to benefits payment restriction. The amount paid each financial year must not exceed 10% of the account balance on commencment, and the account balance on 1 July for each subsequent year. The TRIS cannot be commuted and paid as a lump sum.
Reaching preservation age and retires, ceasing an employment arrangement on or after the age of 60, and 65 years of age and over changes the member's superannuation benefits to unrestricted non-preserved with nil cashing restriction. This means that the benefits may be paid either as an retirement phase income stream, or lump sum, or both.
See also Taxation for application of exempt current pension income.
The income stream may be set-up as a regular form of payment from the SMSF. However, it does not need to be regular or a fixed amount. The member has the flexibility to decide the amount and when the payment is made. It may be paid as and when the member request, as long as the total amount paid by the SMSF for the financial year meets the minimum factor (and also the maximum 10% for TRIS).
Conditions of release
Summary of common conditions of release for paying benefits:
|Member's situation||Member may||Income stream amount||Pay benefits as lump sum|
|Reaching preservation age and still employed||Commence a transition to retirement income stream||Minimum 4%, Maximum 10%||No|
|Reaching preservation age and retires||Commence a retirement phase income stream||Minimum pension factor, No maximum||Yes|
|Ceases an employment arrangement on or after the age of 60||Commence a retirement phase income stream||Minimum pension factor, No maximum||Yes|
|65 years of age and over||Commence a retirement phase income stream||Minimum pension factor, No maximum||Yes|
Under 60 years of age – reach preservation age and cease gainful employment and have no intention to become gainfully employed in the future.
At least 60 years of age – cease an employment after age 60 (if you have more than one employment, you only need to cease one after age 60 to meeting this condition)
Your preservation age is dependent upon your date of birth:
|Date of birth||Preservation age|
|Before 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|From 1 July 1964||60|