Superannuation income stream

The income stream may be set-up as a regular form of payment from the SMSF to a member. 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 by the SMSF. An income stream meets the standard if the payments occur at least annually and, for an account-based pension, the minimum amount is paid to the member each year.

The income stream will be account based, which means that the income stream ceases once the member's capital account is depleted.

There may be taxation implication on income stream payments you received when you are under the age of 60. See more information, see Taxation.

Retirement phase income stream (post-retirement)

An retirement phase is a way of receiving your superannuation benefits as an income stream, instead of a lump-sum, after you have reached your preservation age and have permanently retired or have satisfy another nil cashing restriction condition of release.

The annual minimum income stream payment is based on age. The minimum is calculated by multiplying the minimum factor by the capital balance on commencement (pro-rata if not commenced at the beginning of the financial year), and the balance on 1 July in subsequent years. There is no maximum, i.e. the maximum is the total amount of the account balance.

The income stream must be paid each financial year. The total payment for the financial year must be at lease the minimum amount. The payment does not need to be regular or of the same amount. The amount can be satisfied by one annual payment.

The income stream account is converted from the monies accumulated in the superannuation fund. Investment earnings are added to the account and income stream payments are deducted from the account until the account balance is fully paid out. At that time, the income stream ceases.

You can continue to contribute (both concessional and non-concessional contributions) to the SMSF. The contributions will be allocate to an accumulation account, and not added to the income stream account. However, you may commence a new pension from the amount in the accumulation account. Your ability to make contributions is subject to eligibility requirements, generally, under age 65 or satisfy the work test if between age 65 and 74, and have total superannuation balance of $1.6 million or less.

Transition to retirement income stream (pre-retirement)

A transition to retirement income stream (TRIS) allows you to receive your superannuation benefits as an income stream even whilst you are still working if you have reached your preservation age. However, there is an annual maximum on how much superannuation benefits that can be paid to you by the SMSF.

The annual minimum income stream payment is 4% of the capital balance on commencement (pro-rata if not commenced at the beginning of the financial year) of the TRIS and the balance on 1 July in subsequent years. The annual maximum is 10% of the capital balance on commencement of the TRIS and the balance on 1 July in subsequent years.

The income stream must be paid each financial year. The total payment for the financial year must be within the minimum and maximum amount. The payment does not need to be regular or of the same amount. The amount can be satisfied by one annual payment.

The TRIS account is converted from the monies accumulated in the superannuation fund. Investment earnings are added to the account and income stream payments are deducted from the account. A transition to retirement income stream cannot be commuted and paid-out in lump sum unless you satisfy a nil cashing restriction condition of release (e.g. you retire or turn age 65), at which point, your income stream becomes a retirement phase income stream.

You can continue to contribute (both concessional and non-concessional contributions) to the SMSF. The contributions will be allocate to an accumulation account. Your ability to make contributions is subject to eligibility requirements, generally, under age 65 or satisfy the work test if between age 65 and 74, and have total superannuation balance of $1.6 million or less.

Pension factor

The minimum amount of income stream payment for the financial year is determined by multiplying the capital balance by the minimum factor. In the first year, the capital balance is the amount used to commenced the income stream. For subsequent year, it is the capital balance on 1 July. In the first year, the minimum is pro-rata if the income stream is not commenced at the beginning of the financial year.

The age of person receiving the income stream is the age on commencement in the year the income stream is commenced, and age on 1 July for subsequent year.

The pension factor is as follows: