Additional contribution to a superannuation pension that has commenced to be paid

Can the capital that is backing a superannuation pension or annuity be added to, or topped up, after that pension or annuity commences to be paid?

No. Additional contributions to the capital backing a superannuation pension or annuity can not be made once a stream of payments commences to be paid.

The taxpayer is in receipt of an allocated pension from a complying self managed superannuation fund (SMSF).

The taxpayer wishes to make an additional contribution to the SMSF to increase his pension.

The taxpayer is eligible to make the contribution into the SMSF under the minimum standards prescribed in the Superannuation Industry (Supervision) Regulations 1994 (SISR).

For tax purposes a superannuation pension cannot be added to or "topped up".

The original allocated pension must be commuted then rolled over (either via an internal roll over or an external roll over). A new allocated pension may then commence for an increased amount (i.e. that includes both the commutation amount and the additional contribution).

For Reasonable Benefit Limit (RBL) purposes, two RBL reports would be required. One RBL report would be for the commutation and rollover of the original allocated pension; this will result in an RBL reduction to the capital value of the original pension. The second RBL report would be for the commencement of the new allocated pension. The purchase price of the new allocated pension would generally be the amount rolled-over plus the additional contributions.

The annual deductible amount and the minimum and maximum payment limits would also need to be recalculated for the new allocated pension.