Those who have allocated or account based pensions know that there is a minimum amount that has to be drawn from the allocated pension each year. The minimum amount is arrived at by dividing the account balance as at 1 July each year by the minimum percentage factor shown in the table below, according to the then age of the person.
|
Age of Beneficiary
|
Percentage Factor
|
|
Under 65
|
4
|
|
65 - 74
|
5
|
|
75 - 79
|
6
|
|
80 - 84
|
7
|
|
85 - 89
|
9
|
|
90 - 94
|
11
|
|
95 or more
|
14
|
For the last couple of years the government has allowed the minimum drawndown amounts to be reduced by 50%. This was done because of an acknowledgement by the government that many self-funded retirees had suffered significant capital losses during the financial crisis, from which they had not yet recovered. The drawdown relief therefore would assist those people by reducing the need for retirees to sell assets at a loss in order to meet the minimum payment requirement.
The government has just announced that this relief will be extended another year. That means that retirees will be afforded a 50 per cent reduction in the minimum drawdown amounts for account-based, allocated and market-linked pensions for the 2010-11financial year. That means that for example, a person under age 65 need only draw 2% of their account balance during this financial year.
This relief measure has been generally welcomed. The Small Independent Superannuation Funds Association (SISFA) has called for the relief to be extended permanently though the government is unlikely to accede to this request.
POSTED: 01-Jul-2010
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Earlier this year, the government reduced that minimum amount that had to be withdrawn from allocated pensions for the 2008-09 year. The changes halved the minimum withdrawal amount which effectively meant that recipients were able to cease pension payments if they choose, for the remainder of the financial year. .
In the recent budget the Treasurer announced that this concession will be extended and the minimum payment amounts for account-based pensions will be halved for 2009-2010. The purpose being to give retirees an opportunity to recoup losses that have occurred from the stock market downturn..
The minimum percentage for 2009-2010 which will be calculated on the 1 July 2009 balance, will be as follows.
|
Under age 65
|
2%
|
|
65-74
|
2.5%
|
|
75-79
|
3%
|
|
80-84
|
3.5%
|
|
85-89
|
4.5%
|
|
90-94
|
5.5%
|
|
Age 95 or more
|
7%
|
Allocated and Account Based pensioners will be advised of this when their fund writes to them, normally in June each year. Recipients can then choose the level of income that suits them.
POSTED: 25-May-2009
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On the 18th of February, Treasurer Wayne Swan and Senator Nick Sherry, Minister for Superannuation and Corporate Law, announced a 50% reduction in the minimum drawdown required for account-based pensions.
This move by the Government was prompted by the significant downturn in financial markets and the growing concern that retirees will need to sell investment assets and realise losses.
This applies to account-based, allocated and term allocated pensions and annuities and is for the 2008/09 year only. It effectively means that people drawing these types of pensions currently can reduce them to less than the statutory minimums that start at 4% of the account balance. It is important to note that the percentage applies to the balance as at 1st July 2008, not the current balance.
This is a positive move, which will allow pension recipients to preserve their capital in these volatile times.
POSTED: 20-Feb-2009
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