“SMSF practitioners now really need to start looking at the client’s estate plans in terms of what income streams they’re receiving, if they’re receiving any reversionary income streams or whether they just have binding death benefits in place,” Mr Lewis said.

“For those with more than $1.6 million, reversionary pensions may be treated more favourably in terms of the amount and when it’s counted towards the transfer balance account test.”

SuperConcepts executive manager of SMSF technical and private wealth, Graeme Colley, said it’s important reversionary pensions are considered carefully before they are implemented, as there can be some traps.

“If you’re going to put a reversion in, make sure your pension can move from being non-reversionary to reversionary,” Mr Colley said.

“If that’s not possible, they may need to commute that pension and start a new pension. The trap there will be that if someone qualifies for Centrelink benefits, then that is an issue they need to be aware of. That may lend itself to people keeping the non-reversionary pension. 

Individuals with more than $1.6 million who’ve had to do something with the excess or will be doing something with it to transfer it out of pension phase, will need to work out what to do with the money when it gets paid out to their family on their death, Mr Colley said.

“Or if their spouse dies, they’ll need to decide what happens with the money then,” he said.

“They might want to look at whether they can implement equalisation strategies for the estate [also].”