The strategy: To keep my self-managed fund pension payments on track.

Do I need to do that? You probably reckon that since it's your money anyway, it doesn't matter a lot if you miss the odd pension payment. But the government takes a different view of things. To discourage retirees from using their super as a concessionally taxed way to build up an inheritance for the children, it has set annual minimum pension payments. A Partners Superannuation Services director, Martin Murden, says if you don't make these minimum payments your super fund can lose tax concessions on its income, potentially leaving you thousands out of pocket.

How does that work? Murden uses the example of John and Jean, retirees in their late 60s with $1 million in their super fund. Their minimum pension is $25,000. Let's say the fund has taxable income of $50,000 for the year. If the $25,000 pension is paid as required, there is no tax payable because pension fund earnings are tax-free. But if the pension payment fell short - let's say John and Jean received $20,000 instead of $25,000 - John and Jean could be liable for a tax bill of $7500 - 15 per cent of the $50,000 the fund has earned.

Murden says where funds don't make their minimum pension payments they can be taxed as accumulation rather than pension funds - resulting in this extra 15 per cent tax on earnings. Unfortunately, if you haven't made the payment by June 30, your fund hasn't fulfilled the requirements, even if you have simply overlooked a payment and make up for it in early July.

How much is the minimum payment? It varies according to the age of the recipient. The minimum payment ranges from 4 per cent for pensioners under 65 to 14 per cent for those aged 95 or more. However the government has halved these percentages for 2008-09 and 2009-10 to provide relief to retirees who have been hit by the global financial crisis. So if you're under 65 this year you only have to draw down 2 per cent of your account balance. Murden says the minimums are calculated on your account balance at June 30, the last day of the previous tax year. So if your account balance then was $800,000 and it is now $1 million, you'll still only need to draw down $16,000 as opposed to $20,000.

What if I don't need the income? The minimum payment must still be made to meet the pension fund requirements. If you can't make the payment for some reason - perhaps you need to sell assets to free up the cash - Murden says an option is to stop or "commute" your pension. This in effect switches your pension fund back to an accumulation fund. If you wanted to commute your pension at the end of this month, Murden says, you'd need to pay two-thirds of the minimum pension before then and you'd pay the super fund tax rate of 15 per cent on any earnings to the end of this year but that would still be preferable to being hit with 15 per cent on the fund's earnings for the entire year. You could switch back to a pension fund later on. He says if you're considering commuting, you need to ensure all the correct documentation is done at the time.

Can I just withdraw the minimum as a lump sum at the end of the tax year? Murden says there are no rules on when payments must be made so you can structure them as a regular monthly payment, take them when you need the money, or as a single lump sum at any time. But he says you're at more risk of making a mistake if you withdraw the money on an ad hoc basis. He says trustees need to ensure they have a system for tracking pension payments to ensure they meet the minimum.

He says if there was a genuine reason you were unable to make a payment before June 30, it may be worth asking the Tax Office for leniency. Saying you forgot is unlikely to cut it.