And is the minimum pension for the current year recalculated on his 65th birthday?
Whilst a TRIS automatically becomes a retirement phase pension on the recipient’s 65th birthday, it doesn’t automatically become an account based pension.
In the absence of your client undertaking a “stop & restart”, he’ll continue to receive the same pension as before. It won’t be called an account based pension, but it will have all the same features as an account based pension, ie:
For simplicity, once your client turns age 65, we’d differentiate his pension from a “normal” TRIS, by calling it a “retirement phase TRIS”.
Because the pension is just continuing to your client, his minimum pension for the current year will remain at the amount you have already calculated for this year based on his TRIS balance at 1 July. You do not need to recalculate his minimum pension until the following 1 July – at that point his minimum pension will be calculated based on a 5% draw down factor because he will be 65.
For some clients where the size of their TRIS balance would cause them to exceed their transfer balance cap, it may make sense to “stop & restart” the pension with a lower account balance.
Need help answering complex SMSF queries? Why not sign up for a technical support package and have access to our expert Technical Services Team via a dedicated free number or via email. Sign up for support through our Help Desk here.