When setting up an SMSF, Members can rollover their existing superannuation balances from Retail/Industry/Other SMSFs into their new SMSF. These existing balances can include Accumulation and Pension accounts.

Rollovers into an SMSF is typically from a Members Accumulation Account. To execute a rollover from your Retail or Industry Fund into your SMSF you will need to complete a Member Benefit Rollover Statement. Members will contact their existing Fund to arrange a rollover and deposit a cheque into their SMSF bank account. We give some guidance on the process involved on the rollover process:

You can also rollover your Pension balances into your SMSF. The most appropriate way to execute a Pension rollover is to commute your existing balance. The accumulation balance will be deposited into the SMSF and this will be used to start a new Pension account.

There is an alternative approach stating that Pension balances can be rolled over without a commutation, although this is quite a technical area. The ATO ruling is quite ambiguous and it is unclear if a Pension Account rollover will require a Commutation or not.

A Commutation is when an amount from a pension payable is exchanged for an immediate Lump Sum. This means that before rolling over a Pension Account, the existing balance will be paid out as a Lump Sum to the Trustee and rolled over into an Accumulation Account. We adopt the same procedure when rolling over a Pension Account for clients. Please see here for a review on the ATO ruling by an external lawyer firm:

1. The member must request a rollover and ensure that they are allowed to do so under the terms of their superannuation pension.
2. The Trustee can confirm their right to roll over the pension.
3. The Trustee issues a pre-payment statement.
4. If required, the Trustee will have to workout the Pro-Rate Minimum Pension Payment before the lump sum is paid.
5. The Trustee sells or transfers all assets to make the Lump Sum Payment.
6. The Trustee adjusts the original pension’s account balance.
7. If required the Trustee will need to issue all relevant exit information to the Member (Product Disclosure Statement).
8. Before rolling over it may be prudent for Trustees to get a Private ATO Ruling on the matter.

The ATO is silent on if a commutation is required for a Pension Account to be rolled over. This silence by the ATO may be viewed as if a commutation is not required but, our view is that a commutation is required to ensure that the Pension Account is rolled over and calculated correctly. Please see the Taxation Ruling by the ATO on this matter below:

When you’re ready, we can assist with setting up an SMSF and rolling over an existing Pension Account. If you have an existing SMSF and wish to rollover a Pension Account, we can take on your Fund and assist with the process please see our take-on process here: