When you start a Transition to Retirement income stream (a pension while you still work), there are certain minimum amounts to withdraw. The maximum amount is 10% of the account balance.
Depending on your age, you must withdraw a minimum amount from your Account based Pension each year. Due to the economic effects of COVID-19, the government has halved the percentage of minimum pension payments for the 2020, 2021, 2022 and 2023 financial years.
See the table below for percentages linked with different age categories:
| Age of recipient | Percentage Factor (2020/2021/2022/2023) |
| Under 65 | 2% |
| 65 – 74 | 2.5% |
| 75 – 79 | 3% |
| 80 – 84 | 3.5% |
| 85 – 89 | 4.5% |
| 90 – 94 | 5.5% |
| 95 or more | 7% |
With the global financial crisis in 2009, the minimum percentages were lowered. This enabled Members to preserve more capital in the SMSF. The historical minimum percentages are set out below:
| Age | Previous Year Percentage Factors | |||
| 2008 FY | 2009 -2011 FY | 2012-2013 FY | 2014-2019 FY | |
| Under 65 | 4% | 2% | 3% | 4% |
| 65-74 | 5% | 2.5% | 3.75% | 5% |
| 75-79 | 6% | 3% | 4.5% | 6% |
| 80-84 | 7% | 3.5% | 5.25% | 7% |
| 85-89 | 9% | 4.5% | 6.75% | 9% |
| 90-94 | 11% | 5.5% | 8.25% | 11% |
| 95 or more | 14% | 7% | 10.5% | 14% |
1. The 4% minimum is the normal percentages that apply for minimum pension draw down
2. Minimum amount calculated on 1 July each year for the transition to retirement regular payment
3. In the first year of the account-based income stream, work out the minimum payment pro-rata on effective days in the year
4. Minimum amount to be rounded to nearest $10
5. These minimum amounts are set out in the Superannuation Legislation
To start a Pension or Transition to Retirement, Trustees need to minute this decision. Please see a template of a pension commencement minute below
To read more on Pension payments from an SMSF, read the ATO booklet here:
FAQs
Do I need to submit a Trust Income Schedule if my SMSF is 100% in the pension phase?
Yes, the ATO confirmed SMSFs that are 100% in the pension mode are still required to submit a Trust Income Schedule (TIS) with their tax return from the 2024 income tax year onwards, even though trust income is exempt under the ECPI rules. The ATO is reviewing the TIS instructions for Funds in the pension phase and may update them accordingly. For further reading, please refer to the NTAA booklet here.
