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Retirement phase income streams

Overview of income stream standards

Section: 16.5

Income stream type Term of income stream Payment rules Commutable? RCV Payable by SMSF
1. Account-based pensions
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
2. Non-account based (RCV) income streams
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
3. Lifetime income streams
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
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
4. Fixed term (nil RCV) income streams
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 annuity
5. Innovative income streams (from 1 July 2017)
Innovative income streams (including deferred superannuation income streams) Life of beneficiary/reversionary Payments my be guaranteed by the provider, or  determined through returns on a collective pool of assets or the mortality experience of the beneficiaries of the asset pool. May have a deferral period for annual payments. Yes, subject to a declining capital access schedule and reservation rules. 'Access amount' determined by life expectancy and time of commutation. 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: Monday, November 19, 2018