What is a Pension?

Under the SIS Act and ITAA 97 a superannuation benefit that is not a pension ("income stream") would be a lump sum, and pensions carry certain benefits while lumps sums do as well (see QWYN).

So it's either a lump sum or its a pension. Like there are accumulation accounts and there are pension accounts allowed in a SMSF.

This relationship bounces back and forth between the ITAA 97 and its regulations the ITAR 97 as leading back to a long set of requirements set out in the SIS Regulations which if satisfied will make something a superannuation income stream (kind of like a safe harbour). 

The recently finalised ATO TR 2013/5 has provided guidance on the ATO's view on what would cause a pension to cease, in which the only example 6 is given of failure to make the mimum required payment per annum to satisfy the safe harbour above. 

This could be seen to support the view that once in "pension phase" that pension asset should be paying out every year and not accumulating otherwise its not a pension its an accumulating account still.

The recent Administrative Review Tribunal decision of QWYN v CMR [2025] ARTA 83 gives some useful interpretation of the meaning of "pension", and what could cause something to cease to be a pension.

It could be seen as still up for debate whether all of these factors could make something not a pension however pension documents available on the market have long been verified to cover the requirements to be a pension, as long as the actual required payments are made to the member.

The author believes due to this tension and added complexity of this area that your pension documentation is clear and that no minimum payments are missed and no maximum payments are breached. 

Similarly to the issue of the recipient of a BDBN noted in the Tratter case above, the reversionary pensioner recipient would be restricted under SIS Regs r 1.06(9B) and pointing to r 6.21(2A) (must be paid to a dependant) and r 6.21(2B) must be cashed as a lump sum once the child attains age 25 as referenced in ATO TR 2013/5 para 29.

Swim well within the flags and more updates will follow.