Retirement phase income streams
Overview of income stream standards
|Income stream type||Term of income stream||Payment rules||Commutable||RCV||Payable by SMSF|
|Account- based||Until account balance exhausted||Minimum payment per financial year||Yes, but generally a pro-rata minimum payment must have been made||N/A||Yes|
|Transition to retirement account-based||Until account balance exhausted||Minimum payment per financial year
Maximum payment 10% per financial year (where relevant condition of release is not met)
|No, except where commutation involves unrestricted non-preserved, or a relevant condition of release is met||N/A||Yes|
|Term allocated (TAP clone)1||Term of between life expectancy and the number of years to reaching age 100||Calculated payment each financial year based on remaining term. May be varied +/- 10%. Must also satisfy account-based pension minimum payment rules||No, except if commutation used to immediately purchase another eligible non-commutable income stream||N/A||Yes|
|Non-account- based (RCV)||Flexible - could be fixed (of any term) or lifetime||Minimum annual payment per year (measured from commencement date)||Yes||Yes - up to 100% of purchase price||No, unless fully backed by life office annuity|
|Lifetime (nil RCV commutable)||Life of beneficiary/ reversionary||Minimum first year payment, then fixed percentage, CPI or AWOTE indexation||Yes||No||No, unless fully backed by life office annuity2|
|Fixed term (nil RCV commutable)||Any term up to 100 less recipient's age at commencement||Minimum first year payment, then fixed percentage, CPI or AWOTE indexation||Yes||No||No, unless fully backed by life office annuity2|
|Lifetime (nil RCV non- commutable)||Life of beneficiary/ reversionary||Annual payment can not fall, except if due to CPI indexation||No, except if commutation used to immediately purchase another eligible non-commutable income stream||No||No, unless fully backed by life office annuity2|
1. From 20 September 2007, term allocated income streams (TAP clones) can no longer be commenced, unless the purchase price is funded wholly from the commutation of an existing non-commutable income stream.
2. Where an SMSF had an existing income stream of this type commenced prior to 1 January 2006, it can continue to be paid.
Last modified: Thursday, August 24, 2017