The conditions of release are strictly controlled and severe penalties exist for non-compliance. Your Financial Adviser is a good place to start for advice and guidance in respect to your particular circumstances.
Before either of the pensions listed below can be contemplated, the member must have met a condition of release to qualify to commence the chosen pension.
As soon the member has met the particular condition of release, the benefits convert to unrestricted non preserved benefits allowing the member to commence or have the option to commence a pension.
It is important to note that prior to the commencement of a pension, the fund’s trust deed needs to be reviewed to ensure it allows the commencement and payment of pensions. The Preset Super
Deed has these clauses inbuilt. As a fund needs to upgrade its deed when commencing with Preset Super, this issue has been resolved.
| Condition of Release | Criteria applicable |
| Retirement( reached preservation age – 60 years of age | Member has been gainfully employed ( more than ten hours per week), has ceased employment and does not have an intention to return to work in the future |
| Retirement ( 60 years +) | Member has ceased work ( more than ten hours per week) |
| 65 Years of Age | Member has retired. No differentiation between work status (no need to meet hours per week criteria). Being 65 or older superannuation benefits can be accessed without restriction. |
| Severe Financial Hardship | Member has been receiving Government income support and is unable to meet key living expenses. In this instance they may be able to access limited and restricted access to superannuation benefits. |
| Temporary Incapacity | Subject to strict criteria, member who has stopped work due to mental or physical ill-health can access superannuation benefits |
| Permanent Incapacity | Member has stopped work and based on medical prognosis is very unlikely to ever return to work again can access superannuation benefits. |
| Terminal Illness | The illness must have been diagnosed as terminal by two medical professionals with a certification that death will occur within twelve months of the prognosis. |
| Compassionate Grounds | Strictly applied and needs to be approved by APRA |
| Death of the member | When the member dies, the superannuation benefits are released according to the arrangements made by the member. |
There are quite a few types of pensions that can be paid from an SMSF however the most often used are:
Transition to Retirement Pension and Account Based Pension.
Once a member has attained 55 years of age, under current legislation it is permitted for a trustee/member to commence a transition to Retirement pension.
In essence the TRIS is a modified version of the account based pension in that it has prescribed limits within which the trustee of the SMSF must fully comply.
Currently there is a requirement to take a minimum of 4% of the members account balance based on 1 July each year with a maximum of 10% of the members balance. Members are not permitted to withdraw above the 10% limit each year.
An Account Based Pension is a simple to operate pension that affords a great deal of flexibility to members accessing an income stream in retirement. In order for a member to commence this type of pension, they must have met a condition of release.
Additionally, the member is obliged to withdraw a minimum pension amount annually based on the age of the member accessing the pension as at 1 July each year.
The following table illustrates the minimum pension that must be taken each year.
| Members Age | Minimum Pension to be withdrawn annually |
| Under 65 | 4% |
| 65-74 | 5% |
| 75-79 | 6% |
| 80-84 | 7% |
| 85-89 | 9% |
| 90-94 | 11% |
| 95+ | 14% |
We strongly urge the member to consult with their licensed financial adviser prior to undertaking any actions in relation to a commencement of a pension as the penalties for non-compliance are severe. The information above is general in nature and should not be construed as advice. Preset Super is not licensed to provide advice. Furthermore, the information contained herein does not take account of the member’s personal circumstances.