“How much do I have to take out?” is one of the most common questions asked by members of a self-managed super fund paying a retirement income. The answer, for 2026–27, is governed by a clear age-based formula — but the fuller picture involves more than a single percentage. There is the calculation itself, the special pro-rata rule in the first year, an important distinction between account-based pensions and transition-to-retirement pensions, and the longer-term question of how quickly a balance is being drawn down over a retirement that may last decades. This article focuses on the quantum: how the minimum is worked out, what limits do and do not apply, and the planning considerations around drawdown.

 

The minimum by age in 2026–27

An SMSF account-based pension must pay a minimum amount each financial year, set as a percentage of the member’s balance that increases with age. With the temporary COVID-era 50% reduction having ended on 30 June 2023, the standard rates apply in full for 2026–27:

  • Under 65: 4%
  • 65 to 74: 5%
  • 75 to 79: 6%
  • 80 to 84: 7%
  • 85 to 89: 9%
  • 90 to 94: 11%
  • 95 or over: 14%

The percentage is based on the member’s age at 1 July (or at commencement in the first year). As a member ages, the required Withdrawal rate steps up, reflecting a shorter expected remaining period over which the balance is spent.

 

Calculating the amount

The minimum is the age-based percentage applied to the member’s pension Account Balance on 1 July of the financial year. The result is rounded to the nearest ten dollars. For an established pension, the sum is simply the opening balance multiplied by the rate.

Take a hypothetical illustration. David is 72 and begins the 2026–27 year with a pension balance of $1,200,000. His age band (65 to 74) carries a 5% minimum, so his minimum drawdown for the year is $60,000. If David were 78, the 75-to-79 rate of 6% would apply, lifting the minimum to $72,000 on the same balance. He can take these amounts monthly, quarterly or as one payment before 30 June, so long as the full minimum is paid in cash during the year. This is an illustrative example only and not a recommendation.

 

The first-year pro-rata rule

When a pension commences partway through a financial year, the minimum is pro-rated for the number of days from commencement to 30 June, based on the balance at commencement. A pension that starts on 1 January runs for roughly half the year, so the annual minimum is broadly halved. A useful concession applies at the end of the year: if a pension commences on or after 1 June, no minimum payment is required for that short first period. From the next 1 July, the full annual calculation resumes.

 

The key distinction: no maximum on an account-based pension

A point that surprises many trustees is that an account-based pension has no maximum. The percentages above are floors, not ceilings. A member can withdraw as much as they like above the minimum, including the entire balance, subject to the fund’s cash position and the general rule that new contributions cannot be added to an existing pension.

This contrasts sharply with a transition to retirement income stream (TRIS), used by members who have reached preservation age (now 60) but are still working and have not met a full condition of release. A TRIS carries the same 4% minimum but is also subject to a 10% maximum of the 1 July balance each year, and is non-commutable, meaning lump sums cannot be taken. A TRIS in the pre-retirement phase is also not in retirement phase, so its Earnings are taxed at 15% rather than 0%, until the member meets a full condition of release such as retiring or turning 65. Understanding whether a pension is an ordinary account-based pension or a TRIS is therefore essential to knowing what limits apply.

 

Longevity and drawdown planning

Meeting the minimum and deciding how much to actually draw are two different questions. The minimum sets the least a fund must pay; it does not indicate a sustainable or optimal level of income. Drawing only the minimum preserves Capital and keeps more inside the concessionally taxed environment, but a rising percentage with age still steadily reduces the balance. Drawing well above the minimum provides more income now but shortens how long the balance may last.

Longevity is the central uncertainty. A member retiring at 60 may need their savings to support 30 years or more. Investment returns, inflation, health costs and whether a member wishes to leave a bequest all bear on how quickly it is prudent to draw down. The age-based minimums are designed so that, broadly, the balance is consumed over an expected lifetime rather than left untouched, but they are a legislative floor, not a personalised spending plan.

 

What SMSF trustees need to know

For trustees, the practical tasks are to recalculate the minimum each 1 July as balances reset and ages potentially cross into a new band, to confirm whether any pension in the fund is a TRIS with its 10% cap, and to ensure enough cash is available to make payments without forced asset sales. Keeping records that show the minimum was calculated correctly and paid in full supports the fund’s retirement-phase tax position. Beyond the minimum, how much to withdraw is a planning decision that turns on each member’s circumstances rather than any single rule.

 

Key Takeaway

For 2026–27, the SMSF pension minimum runs from 4% under age 65 up to 14% at 95 and over, calculated on the 1 July balance and pro-rated in the first year (with no payment required if the pension starts on or after 1 June). An account-based pension has no maximum — members may draw more — whereas a transition-to-retirement pension is capped at 10% and taxed differently. How much to withdraw above the minimum is a longevity and planning question, not a fixed rule.