When a SMSF member moves from the accumulation phase of life to the retirement phase and has satisfied a condition of release, this generally coincides with the commencement of an income stream being paid from the SMSF. The most common type of income stream paid from a SMSF is known as an account based pension.
An account based pension is simply an income stream paid from the SMSF to the member, generally over a series of periodic payments throughout the year.
Account based pensions will have the following features:
When a member commences an account based pension, there is a minimum amount that must be paid out each year as pension payments. There is no maximum amount, except of course for the entire account balance. These minimum amounts are quoted as a percentage of the member account balance as at the start of the financial year.
The minimum pension factors are as follows:
|95 or over||14%|