This strategy can help the client to release extra funds from their transfer balance cap, she explained.

“That way, when their partner or spouse passes away, they’ve got some extra room there to start a new pension,” Ms Sanderson said.

The SMSF Academy’s Aaron Dunn explained that a member’s transfer balance account dies with that member and does not carry across to the surviving member.

In a husband and wife situation, he said, where the combination of those two pension amounts is greater than the transfer balance cap, the SMSF practitioner will need to discuss with clients how they might be able to reduce the value of the initial credit when it is applied to one or more income streams.

“Therefore, rather than treating those above minimum payments as pension payments, they may want to partially commute that income stream because of course, they’re going to get a debit against their transfer balance cap,” he said.