On Saturday 29 May, the Government unexpectedly announced an extension to the temporary reduction in superannuation minimum drawdown rates through the financial year 2021/22.
The Government originally introduced this policy in response the covid-lead market correction in early 2020. Retirees had had their retirement savings diminished by the falling market and to support them the government reduced the minimum pension requirement. By doing so it allowed self-funded retirees to reduce their pension thereby withdrawing less on their already decreased funds.
In their release the Government sighted that some pension funds still haven’t recovered from the covid correction and in their generosity this extension will allow retirees some flexibility. The more cynical would say it’s a sweetener, for a group that may felt forgotten in the budget, in what may be an election year.
Either way it is good news for self funded retirees, giving them more flexibility in their investments.
The Account Based minimums for the 2021/22 Financial year are:
| Age | Standard minimum | Reduced minimum for 2021/22 |
|---|---|---|
| Under 65 | 4% | 2% |
| 65–74 | 5% | 2.5% |
| 75–79 | 6% | 3% |
| 80–84 | 7% | 3.5% |
| 85–89 | 9% | 4.5% |
| 90–94 | 11% | 5.5% |
| 95 or older | 14% | 7% |
For Term Allocated Pension, the income ranges are:
- Maximum Pension: 110% of factor-based pension
- Minimum pension: 45% of factor-based pension (i.e 50% of the standard 90% of factor-based payement rule)
If you would like to discuss how these changes may affect you cashflow or retirement income, please do not hesitate to contact our offices.
The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. Louella Jorge is an Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. This editorial does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser before you act
