If an SMSF member has an account in pension phase at the time of their death, under superannuation law the pension ceases at the point of death, unless a dependent beneficiary is automatically entitled to a reversionary pension.
Where a super income stream automatically transfers to a beneficiary (i.e. an auto reversionary pension) trustees must ensure that the minimum pension payments continue to be made, including in the year that the death occurred.
A reversionary pension nomination is made at the time a pension is commenced in the SMSF. It is important to check relevant superannuation law and the SMSF’s trust deed to see if a reversionary pension nomination is allowable.