A pension is a
form of regular income that you receive over time from a superannuation fund. To get the tax
and other advantages of
pension, there are several restrictions on what type of payments are allowed,
and what can happen to the pension.
The
Superannuation Industry Supervision legislation (SIS for short)
requires the following characteristics for all pensions:
The pension must be paid at least annually.
The pension cannot be transferred to a person other than a reversionary
beneficiary on the death of the primary beneficiary, or of another
reversionary beneficiary.
The capital value of the pension, and the income from it, cannot be used as
security for a borrowing.
In addition, SIS recognises four approved types of pension which can attract
favourable tax treatment. They are, in order of simplicity:
