“This could be a diabolical outcome in some circumstances where there is little or no scope to crytallise assets to pay out the death benefit,” Mr Dunn said.

However, he said, recent ATO guidance indicated that once a trustee discovered they had failed to meet the minimum requirements, they could cash out the pension and begin another income stream in the following financial year.

“If a contravention has occurred, so long as the trustees act swiftly to cash the benefit ‘as soon as practicable’ to prevent further possible contraventions, an income stream can be re-established,” Mr Dunn said.

“This can be achieved by immediately cashing the benefit in the form of a new retirement phase income stream as soon as they become aware of the breach, cashing the benefit in the form of a lump sum, or rolling over the interest that supported the death benefit income stream pension to another complying super fund for immediate cashing as a new death benefit income stream.”

He added that, in some cases, trustees may qualify to use the commissioner’s general powers of administration (GPA), which would allow them to continue the pension if any underpayment had been minor and due to an honest mistake.

If this was not the case, the options were to purchase another income stream following the cessation of the previous pension, or cash the pension out as a lump sum, Mr Dunn said.