An SMSF pension has a deadline. Your dividends don't.

By Ryan Wimalasena · 22 September 2026 · 7 min read

A fund that pays a pension makes a deal with the tax office. The earnings on the pension's assets stop being taxed, and in return the fund pays the member at least a set slice of the balance every year, in money, by 30 June. The dividends that pay for most of it were never told about the deal. They arrive when the companies decide, in amounts the companies decide on, and in some months they don't arrive at all.

Most years the two rub along. This piece is about the months and the birthdays when they don't.

It's a bigger crowd than it sounds. The ATO counted 672,805 SMSFs in March 2026, holding A$1.06 trillion between them, and listed shares were the largest thing they owned, at 26% of it. For a fund paying a pension, those shares are the pension.

What the law asks for

The arithmetic is short. Take the pension account's balance on 1 July, multiply it by a factor set by the member's age on that same day, and round to the nearest ten dollars. Under 65 the factor is 4%. From 65 to 74 it's 5%. After that it climbs: 6% from 75, 7% from 80, 9% from 85, 11% from 90 and 14% from 95.

Read the last row twice. The ATO's full list of consequences runs like the exclusions page of an insurance policy, and it ends with a new pension having to be started before the exemption comes back. The Commissioner can let a pension carry on in what the ATO calls limited circumstances, which is a phrase to read once and never plan around.

Transition to retirement pensions run on different rules, including a 10% ceiling, so everything here is about the retirement-phase kind.

A fund to hold still

Take a fund with A$1 million in one member's pension account, invested in the eight holdings from our piece on what a portfolio should tell you, scaled up tenfold: an Australian shares ETF, two big banks, a miner, a property trust, a telco, a retailer and a supermarket. It pays A$44,670 a year in cash dividends, 4.47% of the balance. The member is 67, so the minimum is A$50,000. The fund pays it at A$4,170 a month, which clears it by A$40.

Nobody should own this portfolio because it appears in an article. It's round numbers doing a job.

The months

Four months carry the year: July, September, December and March, when the banks, the miner, the telco and the retailer pay. The other eight send out more than they take in. November and May bring in nothing at all, and the pension goes out anyway, because a pension doesn't know what month it is.

Over the year the fund takes in A$44,670 and pays out A$50,040. The A$5,370 difference comes out of the fund's cash, and when the cash runs out it comes out of the shares, at whatever price the market is offering that week.

The law only asks for the money by 30 June, at least once a year. A fund can time its payments to the dividends instead of the calendar, or hold enough cash to ride through the quiet months. Either way, somebody has to know which months are quiet before they arrive.

The refund that turns up late

A fund like this has a second income, and the companies don't pay it. Its pension-phase earnings aren't taxed, so there's no tax for its franking credits to reduce, and a complying fund gets the unused credits back as a refund. On this portfolio that's A$16,005 a year, 36% on top of the cash. Fully franked, every dollar of dividend would bring 43 cents with it.

The refund comes out of the fund's annual return, and the return can't be lodged until the year is over. Most funds lodging their own have until 28 February, and a tax agent's lodgment program sets its own dates. So the refund that helps pay this June was earned the year before. In a steady year that's fine: dividends plus last year's refund come to A$60,675, comfortably over the A$50,000 minimum.

The trouble comes after a cut. The refund shrinks with the dividends that earned it, and it shrinks a year late, so the fund takes the same hit twice: once when the cut lands, and again when the smaller refund does.

The birthdays

At 67 the example fund clears the minimum by A$10,675 once the refund is counted. At 75 the factor steps to 6%, a fifth more than the year before, and the margin falls to A$675, the kind of margin one bad reporting season eats. At 80 the minimum is 7% and the fund is A$9,325 short. From there the gap widens with every band: A$29,325 at 85, A$49,325 at 90.

None of that means anything went wrong. A pension is meant to be spent. For this fund, 80 is where a fund living on its dividends becomes one that sells something every year, and it's better to decide in July what that will be than to find out in June.

The age that counts is the one on 1 July. Turn 75 on the second of July and the whole year runs at 5%. The step up waits for the next July.

When the rule bends

Twice, the government has cut the minimums when markets fell. They were halved from 2008–09 to 2010–11 and cut by a quarter for the two years after, then halved again from 2019–20 to 2022–23. Treasury's fact sheet in March 2020 gave the reason in a line: the cut meant “reducing the need to sell investment assets to fund minimum drawdown requirements.”

The full rates have been back since 1 July 2023. Relief is something that has happened twice, which is a different thing from something a pension can plan on, and in 2020 it arrived in late March, with the market already well down.

What to check before June

The number. It's fixed on 1 July, so there's no reason to meet it for the first time in May.

The quiet months. Which months the dividends land in, which months they don't, and whether the quiet ones bunch up. Two quiet months half a year apart are a nuisance. Three in a row need a plan.

The cash. Whether the fund holds enough to pay the pension through the quiet months without selling in a week the market picks for you.

The refund. When last year's arrived and how big it was. It's income the fund relies on, and it runs a year behind the dividends that earned it.

The next birthday that matters. At 75 the minimum rises by a fifth, and the gap it opens is easier to handle when it's been in the plan since 74.

Where the income comes from. If two banks pay nearly a third of it, as they do in the example, a cut there is a cut to the pension, twice.

Where Guardian fits

Guardian handles the dividend half of this. Paste the fund's holdings and it lays out the next 12 months, month by month, with the companies behind each one and the quiet months left visibly empty. It records every payment per share as it's made, shows how much of the income comes from each company and sector, and tells you when a company confirms a change to what it pays.

In Progress you can name a bill anything and set how often it's paid. Call one the minimum pension, enter the year's figure as a yearly amount, and Guardian shows how much of it the dividends cover, in July, with the whole year still ahead.

Its figures are cash dividends. The franking refund isn't in them, and until the return is processed it isn't in the fund's bank account either. Guardian knows nothing about the fund's rules or the member's age, and it won't tell you what to sell. That part stays with you and whoever keeps the fund's books.

Dividend Guardian provides information and estimates from public data, not personal financial advice, and nothing here is a recommendation to buy, hold or sell anything, or to run a super fund in any particular way. The minimum factors, the 1 July rules and the consequences of a missed minimum are from the ATO, as are the SMSF figures, from its quarterly statistical report for March 2026. The reason for the 2020 cut is quoted from Treasury's fact sheet of 25 March 2020. The fund is arithmetic on an illustrative portfolio, assuming a fund wholly in retirement phase that pays no tax, round franking levels and a 30% company tax rate. Check your own fund's position with the ATO, your SMSF accountant or auditor, or a licensed adviser. Guardian reports confirmed changes; it does not predict them.