(08) 9071 2173
The federal government will continue to support retirees as part of a larger plan to secure Australia’s economic recovery from COVID-19
Many retirees and SMSF’s were, and continue to be, hit by losses in financial markets during COVID-19. In March 2020, the federal government temporarily halved minimum drawdown amounts, (the amount that must be withdrawn from a pension account each year), to allow pension members to withdraw less of their retirement savings and keep a greater amount invested. These temporary minimum amounts were due to return to previous levels from 1 July 2022.
On 29th May 2021, an announcement was made that the temporary minimum pension drawdown amounts would be extended until 30 June 2022. This applies to account-based pensions (including transition to retirement income streams), allocated pensions (including transition to retirement pensions) and market linked pensions. It is not expected the extension will apply to lifetime or life expectancy pensions.
The full set of standard and temporary rates for each age group are outlined in the table below:
The extended legislation halves the drawdown rates themselves. For example, the minimum yearly payment as a percentage of account balance for a retiree aged 65-74 is currently 2.5% (reduced from 5%).
It means if a retiree simply ‘halves’ their normal payment amount, rather than their rate, they may get a different result and therefore fail the minimum pension rules.
Do you have questions about how the extension to the minimum pension drawdown amounts affects you? You can contact our SMSF Specialist Advisor Tania Wright by simply filling in the form below.