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This guide applies to Australian self-managed super fund (SMSF) trustees only. It is general information and not financial or legal advice — consult your SMSF specialist or accountant before commencing a pension.

Transitioning your SMSF from accumulation phase to pension phase is one of the most significant events in your fund's lifecycle. It involves legal, financial, and administrative steps — most of which your accountant or SMSF administrator will guide you through. This checklist covers what you need to prepare.

Before you start

• ✅ Check your trust deed — confirm your deed permits the payment of pensions (account-based pensions). If not, a deed update is required before proceeding.
• ✅ Check the Transfer Balance Cap — as of 2025–26, the general Transfer Balance Cap is $1.9 million. You can only move up to this amount into pension phase. Confirm your balance and any previous cap usage with the ATO or your accountant.
• ✅ Confirm your condition of release — you must have met a condition of release (e.g. reaching preservation age and retiring, turning 65) before commencing a pension.

Documents to prepare

Trustee documents

• ✅ Trustee resolution — a signed minute recording the decision to commence an account-based pension, including the pension commencement date, pension account balance, and minimum annual payment amount.
• ✅ Pension commencement agreement — a written agreement between the fund and the member setting out the terms of the pension (commencement date, payment frequency, amount).
• ✅ Transfer Balance Account report — your fund must report the pension commencement to the ATO via the Transfer Balance Account Report (TBAR). Your accountant or administrator typically lodges this.

Financial documents

• ✅ Member statement — an updated member statement showing the rollover from accumulation to pension account.
• ✅ Minimum pension payment calculation — calculate the minimum annual pension payment based on your age and account balance at commencement (or 1 July if mid-year). Your accountant can confirm the applicable percentage factor.
• ✅ Actuarial certificate — required if your fund uses the unsegregated method (i.e. accumulation and pension assets are pooled). Not required if the fund is fully in pension phase or uses the segregated method.
• ✅ Updated investment strategy — pension phase typically requires a focus on liquidity to meet ongoing pension payments. Review and document any changes to your investment strategy.

Banking

• ✅ Pension payment account — confirm the bank account from which pension payments will be made and set up a payment schedule meeting the minimum annual requirement.

Sharesight reports for your accountant

Your accountant or advisor will need specific financial data to legally commence the pension. Here's what they need and exactly where to find it in Sharesight.

1. Portfolio valuation on the commencement date

Why: To set the "purchase price" of the pension and confirm the balance is within the Transfer Balance Cap ($1.9M).

Sharesight: Valuation Report — set the Report Date to the pension commencement date. This gives the market value of every holding on that specific day.

2. Full transaction history

Why: To audit every buy, sell, and reinvestment and confirm the cost base is 100% accurate before the fund enters pension phase.

Sharesight: All Trades Report — export as CSV for the full history of the fund.

3. Cash balance reconciliation

Why: To verify the fund has sufficient liquid cash to meet the mandatory minimum pension payment.

Sharesight: Cash Account export for the period (if using Sharesight's cash tracking). If not, provide bank statements directly.

4. Taxable income summary (up to commencement date)

Why: To separate earnings that occurred before the pension started (taxed at 15%) from those after (taxed at 0%). This split is required for the fund's income tax return.

Sharesight: Taxable Income Report — run the report for the period 1 July to the commencement date, not the full financial year.

5. Unrealised gains status

Why: To assess whether any large capital gains should be crystallised or managed before the fund switches to pension phase — particularly relevant if using the segregated method.

Sharesight: Unrealised CGT Report — run as at the commencement date.

6. Contribution and withdrawal log

Why: To identify what is "new money" (member contributions) vs. investment earnings for the Transfer Balance Account Report (TBAR) lodged with the ATO.

Sharesight: Performance Report — group by Contribution Analysis to separate contributions from returns.

All reports can be exported to PDF, spreadsheet, or Google Drive. See Exporting a report.

After commencing the pension

• ✅ Lodge the TBAR with the ATO (via your accountant or administrator).
• ✅ Begin making minimum pension payments by 30 June of the first financial year.
• ✅ Update your SMSF annual return to reflect pension phase.
• ✅ Review your asset allocation — see Monitor your investment strategy in the SMSF complete guide.

Disclaimer

This checklist is general information only and does not constitute financial, legal, or tax advice. SMSF pension commencement is a regulated event. Always consult a licensed SMSF specialist, financial adviser, or accountant before proceeding.