What happens to new pensions?

If a pension commences on or after 1 July 2017, the super fund paying the pension will notify the ATO that the pension has commenced and the initial balance of the pension.  The ATO will create a transfer balance account for the taxpayer and credit the initial balance of the pension to the account.  If the credit amount exceeds the transfer balance cap, the ATO will then advise the fund of the excess portion and the fund will have to commute the excess portion and either transfer the commuted portion accumulation phase or pay out the excess portion as a lump sum benefit.  The ATO will also issue an assessment for excess transfer balance tax.

If the taxpayer commences a second pension, the second pension initial account balance will be notified to the ATO and the same process will be repeated.