A sector expert has alerted practitioners to a section of superannuation law SMSF trustees can fall back on should they fail to have enough money in the fund’s bank account to meet a minimum pension payment obligation, but warned using it could be an admission of a different compliance failure.
“If you haven’t already, some of you over the next couple of weeks will probably get a phone call from a client saying: ‘I haven’t satisfied my minimum pension payments yet and I don’t have any money in the fund’s bank account to pay it, so what do I do?’” Accurium senior SMSF educator Anthony Cullen told delegates at SMSF Professionals Day 2026 in Brisbane last week.
“There are two things you probably need to raise there. One is that section 67 of the SIS (Superannuation Industry (Supervision)) Act does actually allow you to have a temporary borrowing to pay a benefit.”
Specifically, the act allows SMSF trustees to take out a borrowing for a maximum of 90 days in order to meet superannuation benefit payments or pay outstanding surcharge liabilities.
The second issue Cullen indicated practitioners have to raise with clients in this situation refers to another obligation trustees must satisfy in the management of their SMSF.
“This discussion is not just about how the client is going to satisfy their minimum pension requirements. To me this discussion is also about whether they know what the requirements of the investment strategy are,” he pointed out.
“Trustees have to formulate, regularly review and give effect to an investment strategy. And what are some of the things we need to think about in the investment strategy? One item is to think about cash flow and the ability to satisfy fund liabilities.
“If your client is coming to you and saying ‘I don’t have cash to make a pension payment’, there is something wrong with their investment strategy.
“That’s the second part of this conversation, which I think a lot of us overlook.”
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
Articles by Darin