For many retirees, the significant losses in financial markets as a result of the COVID-19
crisis are having a negative effect on the account balance of their superannuation pension
or annuity.
To help retirees, the Government has reduced the minimum annual payment required for
account-based pensions and allocated pensions by 50% in the 2019–20 and the 2020–21
financial years.
Superannuation and annuity providers calculate the minimum annual payment required at
1 July each year, based on the account balance of the fund member. The 50% reduction will
apply to the calculated minimum annual payment.
Example
Stan is 67 years of age. At 1 July 2019, Stan’s account-based pension balance was $480,000.
Stan’s minimum annual payment was calculated at 5% (the percentage applicable to his
age) of his pension balance, which is $24,000.
Following the law change, Stan’s required annual minimum pension payment for 2019–20 is
reduced to $12,000.
If Stan has already withdrawn more than $12,000 for 2019–20, he is not able to put the
amount above $12,000 back into his superannuation account unless he’s eligible to make
superannuation contributions and subject to any other rules or limits such as contribution
caps.
We’ve listed below the new revised pension percentages according to age brackets.
|
Age |
Minimum % withdrawal |
Reduced rates by 50% for the 2019-20 and 2020-21 income years (%) |
|
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 + |
14% |
7% |
| Author |
| Kim Jay |
