(DMA Financial Strategists)
- Many of you are aware that the Federal government provided a temporary COVID relief in the 20/21 Financial year whereby the minimum Super pension payments/draw was reduced to 50% of normal. This was to allow superannuants to preserve capital in their accounts if they didn’t need the income.
- Well the good news is this has been extended for another year (see the details below). This doesn’t however mean you need to use this if you have a specific income requirement or would like to draw a certain amount – you can still choose to draw an amount of your choosing as long as it is above the ‘prescribed’ minimum.
Please read below for more detail and don’t hesitate to contact us if you have questions or concerns on how this may apply to you.
Extension of the temporary reduced minimum drawdown rates for retirees
On 29 May 2021 the Government announced that the 50 percent reduction in the minimum drawdown requirements for the 2019-20 and 2020-21 financial years will continue for the 2021-22 financial year.
The extension of the reduced minimum drawdown rates into the next financial year is intended to provide greater flexibility and choice to retirees who may have been impacted by losses in the financial markets as a result of the COVID-19 crisis.
This means your clients who are currently receiving or who choose to receive the minimum will continue to have pension payments based on the reduced minimum from 1 July 2021. Please see below the legislated pension minimums.
|Age at start of pension and each 1 July||Previous 2018-2019 minimum % of account balance||Current 2019-2020, 2020-2021 and 2021-22 minimum* % of account balance|
|65 to 74||5||2.5|
|75 to 79||6||3|
|80 to 84||7||3.5|
|85 to 89||9||4.5|
|90 to 94||11||5.5|
|95 or more||14||7|
*The minimum may be subject to change from time to time. For more information go to ato.gov.au
Please note that the method for calculating the minimum drawdown amount for Term Allocated Pensions is different, and will remain at 45 percent of the calculated amount for the 2021-22 financial year.
What you need to do
You may wish to discuss this with your adviser. They can select a prescribed amount online e.g. minimum, nominated or maximum.
- You maybe can view their pension details online with your provider or contact our office if you are unsure
PAYG and pension statement summaries will be released from mid-July onward from most providers showing your annual minimum amount – remember even if it starts at the adjusted minimum level it can be adjusted up at anytime.
How to change your pension payments
If you wish to receive a different amount, can specify the annual amount you’d like paid and email us or let us know your preference or we can alter at your next review; however remember, this must be within the required minimum and maximum (if applicable) limits.
As always we are here to help so please don’t hesitate to contact one of our team who will assist.