Retirement income flexibility – Budget update 2022/23

To assist retirees to preserve their wealth within the tax-effective super system the Government has halved the minimum required payment from Account-based Pension accounts.  

This was intended to be a temporary measure in 2019/20 designed to help retirees avoid the need to sell investment assets (potentially at a loss) during the onset of the coronavirus pandemic.   The measures have continued each year since meaning retirees with Account-based Pensions now have more flexibility in the management of their pension payments. 

• If you have previously elected to withdraw the minimum amount from your Account-based Pension it is likely your super fund provider will maintain the minimum rate of payment. If your account balance has grown, or your age moves up a bracket, you may experience a payment increase based on the new minimum. If your super balance is lower at the end of this financial year (still 3 months away) your payment may be lower.  It’s always helpful chatting to your Adviser about changes to your financial position and cash flow needs.
• For those drawing a nominated amount above the minimum requirement, now might present a perfect opportunity to reduce your payment rate to preserve more of your super.  The more you withdraw, the greater the chances are you will run out of money. For many, total living costs have decreased with pandemic restrictions limiting things like overseas and domestic travel despite inflation affecting things like energy costs and fuel. You may feel the time is right to decrease your payment rate in line with the potential drop in spending.

A summary of the minimum payment changes can be found in the table below: 

It is important to be aware, you can take any amount above the minimum required and changes are easy to make at any time during the year, provided you meet the minimum payment rules.  

If you would like to review your retirement income, please contact our office to arrange a time with your adviser.