ABP and TRIS Strategies in SMSFs

If your SMSF client is approaching retirement or seeking early access to their super, choosing between an Account-Based Pension (ABP) and a Transition to Retirement Income Stream (TRIS) is a critical decision.

While both options are available within an SMSF, they differ significantly in tax treatment, compliance, and strategic application.

Especially under the current $2 million transfer balance cap (TBC).

Here’s what experienced advisers need to consider when managing or recommending these pension types in 2025.

Account-Based Pensions (ABPs) in an SMSF

ABPs apply to members who have met a full condition of release, such as turning 65, permanently retiring, or ceasing employment after age 60.

Adviser Triggers:

• TBC planning (current cap: $2 million)
• ECPI eligibility for the pension account
• Client wants flexibility in pension drawings or lump sum access

Key SMSF Actions:

• Lodge pension commencement docs with correct valuation date
• Confirm minimum drawdown meets ATO thresholds
• Apply ECPI rules correctly (segregated or proportionate method)

Pro tip: For clients already close to the cap, consider recontribution strategies before starting the pension to optimise tax-free proportions.

TRIS in an SMSF: Pre-Retirement, Not Outdated

TRIS still offers real value for members who’ve reached preservation age but haven’t met a full release condition.

Tax and Compliance Rules:

• TRIS earnings are taxed at 15% until the TRIS enters retirement phase
• The retirement phase starts only after a full condition of release and written notice to the trustee
• The proportioning rule still applies, locking in the tax-free/taxable ratio at commencement

Strategic Use Cases for Advisers:

• Combine with salary sacrifice for clients aged 60+ to reduce personal income tax
• Useful for debt repayments or cash flow bridging while still employed
• Can improve insurance proceeds tax efficiency if structured with a strong tax-free component

Watch for: Incorrectly classifying a TRIS as retirement-phase without proper notification. This can trigger ECPI errors and audit flags.

Decision Filter: TRIS or ABP?

TRIS or ABP? Decision Filter for Advisers

Compliance Watchlist for Advisers

When starting a pension within an SMSF, it’s not just about client intent. It’s a regulated process. Key compliance obligations include:

• Pension document and trustee resolutions must be prepared and retained
• Minimum pension payments must be made annually
• ECPI eligibility must be reviewed each year
• TRIS-to-ABP transition must be documented when the condition of release is met

Unlicensed? Here’s What You Can and Can’t Do

Starting a pension is considered financial product advice.
If you’re not licensed, you can still facilitate document preparation.
But only if the client instructs you directly.
You must keep records that clearly show you did not provide advice, only administrative assistance.

Need help setting up or documenting an ABP or TRIS for your SMSF clients?

We support advisers and accountants with pension establishment, trustee resolutions, and strategy alignment.
Our service streamlines compliance without overstepping licensing boundaries.
Contact our team to ensure your clients’ pension strategies are both compliant and tax-effective.