The second government stimulus package has included some measures specifically aimed at superannuation.superannuation

Minimum pension withdrawals 

Minimum account-based pension withdrawals will be reduced by 50% for the 2020 and 2021 financial years.  A similar measure was introduced during the global financial crisis.

The measure is aimed at reducing the need for retirees to be forced to sell down investments to meet minimum withdrawal requirements.

The revised drawdown rates will be as follows:

Age

Standard Rate

Reduced Rate
2020 & 2021

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%

Example

Jenny is a 67-year-old retiree, that has an account-based pension valued at $500,000 on 1 July 2019.  Under the standard drawdown Jenny’s minimum drawdown requirement is $25,000 per annum.  Based on the reduced drawdown requirements, Jenny is only required to withdraw $12,500 to meet the minimum pension requirements. 

Retirees should consider this announcement in line with their needs and consult their financial advisers in relation to how this may impact their superannuation withdrawal.

For more information

If you require further information regarding this article, please contact your local RSM office today.

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