Q: I am 59 and my wife, 60, has recently stopped working. She has $500,000 in our self-managed super fund and I have $600,000. We have $700,000 outside super invested in shares and high-interest accounts in her name. We own our house outright and our kids are adults. I have a good salary and I plan to retire at 63. My income covers our expenses and allows me to save $20,000 a year and maximise my super contribution. We are considering formalising her retirement and starting an income stream pension for her. Is there a negative consequence if we start a pension for her, considering that she does not need the money? If we start her pension, can we contribute the pension money straight back into our SMSF since our goal is to keep saving until I retire? Kabrau

A: As a couple with a goal of saving as much super as you can until you retire, a strategy that sees your wife start a retirement pension from her super makes sense. Craig Day, head of technical services at Colonial First State, says it will allow your SMSF to transfer a large proportion of its assets – your wife’s $500,000 to start with – into the retirement phase. In this phase, some of the fund’s investment earnings will be tax-free instead of being taxed at 15 per cent as it would in savings or accumulation phase.