With minimum pension breaches still common, practitioners are being urged to adopt proactive monitoring, clearer trustee communication and stronger documentation to avoid audit setbacks and adverse tax outcomes.
Shelley Banton, director of SuperClarity, said on the latest SMSF Adviser podcast that SMSFs are facing renewed scrutiny as the ATO ramps up its focus on pension compliance, prompting advisers to sharpen their year‑round oversight.
Banton said although the end of the financial year has just passed, ensuring trustees meet their minimum pension requirements is not just a year-end check, but about making sure you work with your clients and plan for that year ahead.
“Make sure it’s up to date, it’s correct right from the beginning, and then make sure that minimum is paid before June even hits. I think that that’s critical,” she said.
“Knowing what that [minimum] is at the start of the financial year, showing trustees how to read SMSF software reports, because everybody’s got access to those who are using SMSF software that reports on pensions and contributions and a whole lot of other things from a trustee’s perspective, paying that minimum in a timely manner, set up direct payments, direct debits each year.
“Check in with your clients during the year, see how much they’ve paid against the minimum, and make sure they’re recorded correctly as pension payments, they’re not lump sums, they’re not expenses that have been reimbursed or something else, just so that there’s no misunderstanding about what that payment is, and it’ll reduce order queries at the end of the year.”
She continued that SMSF professionals should ensure they know whether there have been any pension commencements that have happened during the year, or whether there have been any changes such as the passing of a member.
“Make sure that your trustee clients have a relationship with you, so that they’re contacting you when something happens in their fund, or in their lives, that’s going to affect their fund,” she said.
“Prevention is better than cure. Those adverse tax consequences, audit issues, and having to rely on the Commissioner’s discretion after the event is not something you want. Make sure you’re upfront and you’re talking to your clients continually, having planning meetings, so that you know you’re ticking boxes and things go through smoothly for you at audit.”
Banton said there is a simple check list that can help the process run more smoothly including calculating the minimum pensions at the beginning of the July and notifying the trustee in writing so there is documentation available and on record.
“Make sure that they’re establishing those regular payments. We don’t want to see a pension in one year that had a series of payments, and then the next year there was nothing for the entire year but one big lump sum at the end of the year, because that’s not a pension, that’s a lump sum payment,” she said.
“If you want to have one pension payment through the year, it has to start from the day of establishment. You can’t actually chop and change as to how you look at paying your pension payments. You might have irregular payments but just having one lump sum at the end of the year, when you’ve traditionally had a whole lot of regular payments throughout previous years, is not going to bode well for you.”
She added that it is also good practice to review payments before March and make sure clients are aware of what needs to be done, and that any catch-up payments are done well before 30 June.
“Make sure you’ve got evidence of all those payments and calculations on file so that you can provide them not only to your auditor, but to the ATO, if they knock on the door, because that’s the last thing you want,” she said.
“I know that a lot of people are thinking, ‘Oh, this compliance and documentation’, but putting that in place at the very beginning is going to be a lot easier than putting it in place after the fact and trying to remember exactly what happened when and who did it, and how. Getting your ducks in order along the way is mission critical when we’re talking about pensions.”
