GOOD NEWS FOR RETIREES – FOR A CHANGE!
Each financial year, the government requires you to withdraw a certain amount from your pension – this is called your minimum income amount.
As part of the response to the coronavirus pandemic, on 22 March 2020, the federal government announced that the minimum amount has temporarily been halve for 2019/20 and 2020/21 financial years.
On 29 May 2021, the government announced that this temporary reduction would also be extended for the 2021/22 financial year.
Who will benefit?
The temporary reduction in pension drawdown rates will benefit retirees with account-based pensions, market-linked pensions (also called term allocated pensions), as well as transition to retirement pensions (TRIS).
How will this benefit retirees?
For many retirees, the significant losses in financial markets as a result of the COVID-19 crisis are still having a negative effect on the account balance of their superannuation pension. The eligible retirees with enough cash flow will not be forced to sell shares, property, or other assets into a falling market simply to comply with the usual minimum drawdown amount. This will give retirees the flexibility to preserve more of their capital and have more money working for them to capture the market upswing when it inevitably occurs.
Things to consider when deciding how much to withdraw.
If you will need more than last year, you may be able to increase your pension amount. You can also withdraw a lump sum for major expenses. For account- based pension, there is no maximum of how much you can withdraw from your pension accounts. For transition to retirement pensions (TRIS), you can withdraw up to 10% of you account balance as of 1 July in that financial year.
If you will need less than last year, you may be able to lower your pension amount. This keeps as much money in the pension as possible, where it can generate investment earnings without being taxed.
|Percentage of account balance factors, by age (This table only covers account-based pensions and TRISs.)|
|Age||2007–08||2008–09,||2011–12,||2013–14||Reduced rates by 50% for the 2019-20, 2020-21 and 2021–22 income years|
|95 or more||14.00%||7.00%||10.50%||14.00%||7.00%|
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