This minimum pension calculator allows you to calculate the minimum pension income to be drawn from your superannuation pension.
Account Based Pensions are often also referred to as Allocated Pensions.
Non-Commutable Account Based Pensions are often also referred to as Transition to Retirement (TTR) Pensions or Transition to Retirement Income Streams (TRIS),
The minimum pension calculator below is based on the minimum payment amount for a superannuation income stream.
The minimum pension payment is set out in Schedule 7 of the Superannuation Industry (Supervision) Regulations 1994.
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The minimum pension required to be withdrawn from a superannuation income stream is based on your age and account balance.
Your age will determine the pension percentage factor, as detailed below:
|Age at 1 July (or commencement day of income stream)||Pension Percentage Factor|
|95 or Over||14%|
To use the minimum pension calculator, you will need to know what your pension account balance was on 1 July.
If this is the first year of your pension and it commenced on a day after 1 July, then you will need to know the account value the pension was started with.
Use the minimum pension calculator below to calculate the minimum pension you are required to draw for the financial year.
As per the superannuation regulations, the minimum pension income amount should be rounded to the nearest $10.
If the calculation results in an income amount ending in a 5, it will be rounded up to the nearest $10.
It is possible that an income stream will not start on 1 July.
If so, the minimum pension payment calculation is applied proportionately, based on the number of days remaining in the financial divided by the total days in that year.
These are the account based pension rules and transition to retirement rules for the minimum pension calculation.
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Minimum Pension Not Met
If the minimum payment of an account based pension is not met in an income year, the pension is considered to have ceased at the beginning of that income year.
Due to this, all earnings received for the year will be taxed in accordance with accumulation phase tax.
The pension balance will not be eligible for the exempt current pension income provisions on this amount.
If minimum pension payments were not met in a year, but will be met in a subsequent year, the pension is considered to have ceased and then recommenced in the year that it complied with the minimum pension payments.
This will result in a recalculation and revaluation of the member’s balance and tax components.
The above is true for account based pensions and transition to retirement income streams.
There is an exception to this rule. A pension can continue, despite the minimum pension not being met.
The Commissioner of Taxation may allow an income stream to continue if an honest mistake was made, a catch-up payment was made within 28 days of the trustee becoming aware of the underpayment and the underpayment was equivalent to or less than 1/12th of the required minimum pension payment for the year.
However, there are no second chances.
One condition of utilising the above exception is that the trustee of the Fund has not previously applied the exception for failing to meet the minimum pension income payment requirements.
Minimum Pension Payments – Commutation
The minimum pension payment to be made will be based on the number of days the pension was in existence, divided by the total number of days in the year.
This account based pension rule applies to both ordinary account based pensions and transition to retirement pensions.
The proportional rule also applies for pension refresh strategies employed part way through a financial year.
Maximum Pension Payments
The maximum pension payments depend on whether the pension is an account based pension or non-commutable account based pension.
Account Based Pension
The maximum pension payment for an account based pension is only limited by the account balance.
That is, there is no maximum.
An account based pension must only meet the minimum pension payment income requirements.
The total balance of an account based pension can be withdrawn as a pension payment in any one year.
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Non-Commutable Account Based Pension
A non-commutable account based pension has an annual income threshold of 10%.
Each financial year, a pension member can withdraw no more than 10% of the 1 July account balance of their TRIS.
This is one of the disadvantages of a transition to retirement income stream.
For example, if a person had a TTR Pension balance of $300,000 on 1 July, the minimum income they would need to withdraw would be $12,000 (4%) and the maximum withdrawal they could make would be $30,000 (10%).
The maximum amount of a TTR Pension should not be rounded to the nearest $10.
On 1 July of each year, the minimum and maximum pension amounts are recalculated.
If the TRIS Pension began after 1 July, the 10% calculation of the purchase price will continue to be the maximum.
It will not be proportionate based on the number of days remaining in the year.