There was a press release from the Prime Minister's office over the weekend that with everything happening at the moment hasn't received much airplay, but which has the potential to impact your superannuation pension requirements for the forthcoming financial year.
As you'll be aware regulations require that the recipients of a superannuation pension draw at least a minimum level of income each year. The minimum depends upon the age of the recipient and is calculated as a percentage of the balance of their account at the start of the financial year.
For example, a superannuation pension recipient aged between 65 and 74 is normally required to draw a minimum of 5% of their account balance each financial year.
However, as part of its response to the economic impact of COVID the government halved the normal pension minimum levels for the 2019/20 and 2020/21 financial years. The intent of this measure was to permit those drawing a pension from their superannuation to preserve their balance as much as possible while share market values dropped.
While we're clearly far from over the pandemic, share markets have generally returned to their pre-COVID levels so in the absence of any advice from the government the assumption from the industry has been that superannuation pension minimums will return to their normal levels from 1 July 2021.
However, on Saturday the PM's office release this - https://www.pm.gov.au/media/supporting-retirees-extension-temporary-reduction-superannuation-minimum-drawdown-rates - which quite clearly states that the government intends to maintain half minimum pension levels for another financial year until 30 June 2022.
What does this mean for you?
At this stage we're awaiting confirmation of the changes to the regulations, however it seems likely that it will come into effect.
This will provide you with the opportunity to set your pension at half the normal minimum level for the 2021/22 financial year if you choose to, however as always you can draw more than the minimum level if required.
In early July we'll be in a position to confirm your minimum pension for the forthcoming year and we'll be in touch with you then to discuss your options. As usual, flexibility will exist within the year to adjust your pension level (subject to meeting the minimum requirement) and/or to withdraw lump sum amounts should you need to.
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