Jan 5, 2026 Joel Hernandez

What happens if I don’t withdraw my minimum super pension?

To maintain compliance with superannuation regulations and retain access to the Exempt Current Pension Income (ECPI) tax concession, super fund members must withdraw at least the minimum pension amount by 30 June each financial year. ECPI allows earnings from pension accounts to remain tax-free, making it a valuable benefit for retirees.

The ATO’s Tax Ruling 2013/5 outlines the consequences of failing to meet the minimum pension requirement. If a pension income stream does not meet the minimum withdrawal, the super fund may lose its ECPI status, resulting in:

• Increased administrative burden to rectify the issue
• Loss of tax-exempt status for a longer period

What it means to you

If the shortfall was an honest mistake, the ATO may apply a once-off safe harbour provision, provided the following conditions are met:

• The underpayment is minor (less than 1/12th of the annual minimum)
• The member makes a catch-up payment promptly in the following financial year

If these criteria are satisfied, the super fund remains compliant and retains its ECPI status for that year.

If the safe harbour conditions are not met:

• The pension is deemed to have ceased from 1 July
• The account reverts to accumulation phase, and any withdrawals are treated as lump sums, requiring additional documentation
• The fund loses its ECPI status from 1 July until the issue is identified, potentially forfeiting tax savings for the entire financial year
• Additional ATO reporting is required to cease and recommence the pension

What you can do

You may wish to schedule a regular payment from your super fund so that the minimum pension withdrawal is not forgotten.  You should also check your records prior to 30^th June each year to ensure that you have withdrawn the minimum pension.  RDL will issue a reminder each year to help you stay compliant.

Conclusion

Missing the minimum pension withdrawal might seem minor, but the consequences can be drastic. Staying proactive by keeping good records is the best way to make sure your super fund retains its tax benefits.