A leading SMSF actuary has reminded practitioners to check the specific wording contained in the documentation relating to a transition-to-retirement income stream (TRIS) to ensure the pension is not bound by any unnecessary conditions should it convert to a retirement-phase interest.
Accurium principal Melanie Dunn noted the rules for a TRIS are significantly different when a recipient is approaching retirement compared to when the individual has satisfied a condition of release.
Dunn issued the warning in light of the fact a TRIS is now automatically converted to a retirement-phase pension interest once a member achieves a condition of release, such as turning 65. In these instances the TRIS then operates like an account-based pension. Under the previous TRIS provisions this was not the case.
“Just make sure you check the documentation with a TRIS because it could be the case, based on setting these arrangements up under the old rules, the pension documents might stipulate a condition like maximum payment every year of 10 per cent,” Dunn told delegates at SMSF Professionals Day 2025 co-hosted by selfmanagedsuper and Accurium in Brisbane today.
“These new laws mean when a TRIS converts to a retirement-phase interest there is no maximum payment.
“But if your documents are more restrictive, you are going to have to comply with them.”
According to Dunn, should an SMSF member have a restrictive clause in their TRIS documents, such as a defined maximum payment, then there is likely only one solution available to address the situation.
“So just be aware and check your TRIS documents. If they contain limiting clauses, you might need to commute the existing pension and restart a new one because otherwise you’ll be bound by the restrictions you’ve got in those pension documents,” she reiterated.
