We are considering putting our SMSF into pension phase. Having reached the preservation age, we both resigned from our previous permanent full-time positions over a year ago and intended never to be employed in the future for more than 10 hours per week.
However, very, very occasionally, my wife will do a day’s work. On only a few occasions in the last year did it amount to more than 10 hours per week, and only by a few hours in total. We are a bit confused by the “not working” requirements to start an account-based pension. If she is needed, she may work 2 or 3 10-hour days in one week, and then may not work for several months.
How exactly does the “working” requirement operate?
A: Here are some issues for you to consider:
- In the first instance, you should check you trust deed to see what it allows as far as taking a pension.
- Both of you are eligible for Transition to Retirement pensions under the super laws (but again check your fund’s trust deed) – these pensions don’t allow lump sum withdrawals because it’s assumed you aren’t permanently retired.
- If you want another type of pension (for example, one that allows you to take a lump sum withdrawal) then you will need to be able to declare that you’ve ceased gainful employment and will not be employed “ever again” for more than 10 hours per week. Based on the information you’ve provided, I think the problem your wife might have is making that declaration.
