Commencing pensions before age 60 (II)

Commencing pensions before age 60 (II)

The ATO recently made a private binding ruling (PBR) which implied that payments from Transition to Retirement pensions can be

• counted towards minimum pension requirements (ie 4% annual pension payment), AND
• treated as a lump sum payment for tax purposes (ie the first $195,000 can be withdrawn tax free).

This ruling has been reported in the media and some advisers are recommending that their clients adopt this approach. We urge caution in this area.  The facts and rationale of the ruling have not been made available to the public.  The ATO has indicated that it will provide more information, and it is wise to wait for this clarity before acting.  

There are still some situations where you can take money out of super tax free using a Transition to Retirement Pension before age 60, as discussed in this article.  

THIS ARTICLE WAS CORRECT AT THE TIME OF WRITING. SMSF RULES CHANGE OVER TIME AND THE ARTICLE MAY BE LESS RELEVANT IN THE FUTURE.