Pensions, Retirement

Paperwork key for new year pensions

retirement phase pension paperwork

Documentation noting the situation of an SMSF member can allow a pension to be started on 1 July without knowing all of the fund’s asset values.

An accounting firm director has confirmed a retirement-phase pension can be commenced on 1 July of a particular income year even if all of the relevant asset valuation information is unavailable at the time if the SMSF member in question properly documents the situation at hand.

Speaking at the SMSF Association Technical Summit 2023 held on the Gold Coast last week, Cooper Partners director and head of SMSF and succession Jemma Sanderson told delegates: “So if you don’t know what [the member’s total super balance] is [at 30 June of the previous financial year], you can put in place the relevant paperwork [to allow the commencement of a pension].

“[So the paperwork would say] ‘I’d like to request [the commencement of a] pension’ and if they were well under their transfer balance cap, you would say they would have to have met a condition of release if they want a retirement-phase pension, and you could say [it would be] subject to the transfer balance cap.

“So you can put in place all of that paperwork to start the pension, then do the TBAR (transfer balance account report) to [have it recorded] with an estimate and then you can confirm it later once your 30 June entries are done.”

According to Sanderson, this strategy is most useful as 1 July is the ideal date to commence a retirement-phase income stream.

“One July is good because that’s the date when most people get valuations of assets,”she noted.

She pointed out this is not so important if a fund only holds items such as listed shares and cash, but is of particular benefit to SMSFs with property and unlisted assets in their portfolios.

“[Also] the sooner we can start a retirement-phase pension, the better because that gives us the tax benefit for the exempt current pension income,” she said.

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