Pension Commencement

Complete account based pension establishment kit $275 (GST Incl.)

Is retirement just around the corner? If you are thinking of transitioning to retirement, an account based pension should be considered. When you engage in SATO SMSF Administration® for your account based pension commencement, the following step by step guide is provided for trustees:

  • Members should request in writing the pension payment, the date of commencement and the capital value of funds to be used to commence the pension. The amount of income payments to be received should be indicated;
  • For first year clients or clients transferring service provider, a review of the trust deed is required to ensure an account based pension is able to be paid from the fund. For existing clients of SATO SMSF Administration, our superannuation trust deeds are drafted as broadly as possible and an account based pension is permitted to be paid from the SMSF once a condition of release has been satisfied;
  • A meeting of the trustees should be held to resolve to pay a pension from the fund as per the terms requested;
  • Tax file number (TFN) declaration and bank account details should be obtained from the members by the trustees of self managed super funds;
If the unsegregated method is to be used to determine the amount of assessable income which is to be exempt from tax, an actuarial certificate will be required at end of financial year; Or
If the segregated method is the preferred approach to determine the amount of assessable income which is to be exempt from tax, the segregation must be performed prior to the commencement of the account based pension. 
  • Trustees must convene a meeting to resolve and accept the level of pension payments to offer to the member;
  • Assets of the fund must be valued at fair market value on the day the proposed pension payment is to commence;
  • Where an account based pension is commenced with an investment property mid way through a financial year, the previous year’s valuation is acceptable in order to determine the capital value of assets used to commence the pension;
  • Self managed super funds will need to register for PAYG purposes. Income tax will need to be withheld and remitted to the Australian Taxation Office prior to payment of the pension to the member; &
  • PAYG payment summaries and certificate will need to be provided to the taxpayer to include in their annual individual tax returns. Pension income is assessable income and will need to be reported to the ATO in the usual manner.

All the necessary documentation, minutes of meetings, capital value calculation, minimum and maximum pension calculation will be provided. Commencing an account based pension will be a seamless transition to retirement.

 

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