Pension Technical Question – Does a T2R pension have to be stopped and an Account-Based pension commenced when the member attains age 65?

Not necessarily: it all depends on the terms of the pension.

A transition to retirement pension is really a type of account-based pension.  There are three differences between them: unlike account-based pensions, transition to retirement pensions have an upper pension limit and cannot be cashed out.  Transition to retirement pensions can be commenced by a super investor simply attaining their preservation age, while account-based pensions can only be commenced by a super investor if they have attained their preservation age and are retired (or attained age 65).

When the super investor who has commenced a transition to retirement pension retires (or attains age 65), the upper pension limit and the cashing out restrictions cease to apply and the transition to retirement pension will become an account-based pension.

The terms of the transition to retirement pension could require that on retirement or attaining age 65, the pension is stopped and a new account-based pension is issued.  However, this is not required by the SIS legislation.

SUPERCentral transition to retirement pension documents have been drafted on the basis that, if and when an unrestricted release condition occurs in relation to the super investor (eg retirement or attaining age 65), the upper pension limit and the cashing out restrictions simply cease to apply.  There is no requirement to, or need for, the transition to retirement pension to be stopped and a new account-based pension issued.  The same pension continues albeit that the pension is now an account-based pension.