In this course when we say pension, we are referring to a super income stream, these are referred to as pensions in super law.
An account-based pension is an income stream payable to a member from an SMSF based on the amount transferred from their accumulation account. It is the most common type of income stream paid from an SMSF, allowing the member to select the frequency of their annual pension payments as well as how much they wish to withdraw, subject to any limitations. Once an income stream starts, you're required to treat the amount supporting the income stream as a separate interest in accordance with the income tax laws. (Remember your fund can only pay an account-based pension if your fund’s trust deed allows that type of payment.)
When a member starts an income stream (other than a transition to retirement income stream) the SMSF is required to report the value of the income stream using the transfer balance account report (TBAR).
Before starting a pension, you must establish the value of the assets that will support it at market value. The valuation needs to be based on objective and supportable data.
