Superannuation pension drawdown relief
As a result of the significant downturn in financial markets, the Government has announced a 50% reduction in the minimum drawdown requirement for account based pensions for the year ending 30 June 2009. This will apply to account based, allocated and term allocated pensions and annuities.
The proposed adjusted minimum payment amounts are outlined below:
|
Age |
Minimum annual payment |
Revised minimum annual payment |
|
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 and older |
14% |
7% |
If a superannuation pension has already been paid in excess of the new minimum for this year, the minimum in their case will be the amount they have actually received. No refund will be allowed.
The benefit of this announcement is to assist investors who are having to sell investments in a depressed market to meet minimum pension payments (i.e. withdraw money from their pension fund) if they do not need the income.
If you are dependent on the full level of pension income being paid from your pension fund to meet your lifestyle needs, this announcement has less of an impact on your position.
This adjustment to your pension income must be requested, and will not be automatically applied to your account. We will contact all Summerhill Financial Services clients who are in the receipt of a pension to assess how this may impact you and to implement any adjustment to your pension as required.
Note: this announcement was only made on 18 February 2008 and so has not been legislated. Accordingly, the concepts described above are based on our understanding of the announcement made and may change before the relief becomes law.
Tags: allocated pension, minimum pension factors, pension relief