With the beginning of a financial year upon us, SMSF trustees would have already been busy planning & executing various actions within their funds – reviewing investment strategies, ensuring their records are up to date and audit ready, and documenting pension commencements and commutations.
With pension commencements in particular, trustees should be especially mindful that the earliest they can now commence a pension is at age 56 for the 2017 financial year, and not 55. The legislated increase in the preservation age actually came into effect for the 2016 financial year, and continues on into the 2017 year. Going forward, the preservation age will increase to age 57 in 2018-19, 58 in 2020-21, 59 in 2022-23, and 60 in 2024-25.
SMSF Trustees will need to take extra care to ensure that benefits are not inadvertently taken prior to preservation age. Failure to do so may lead to a breach of Regulation 6.17 of SISR relating to benefit payments, or S.65 of SISA relating to providing financial assistance to members, and may be reportable to the ATO.