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 is a temporary measure for this Financial Year and may help you avoid the need to sell investment assets (potentially at a loss) during the coronavirus pandemic. Retirees with Account-based Pensions now have more flexibility in the management of their pension payments while investment markets remain volatile.
- If you have previously elected to withdraw the minimum amount from your Account-based Pension you may experience an unexpected ‘pay cut’ in the new financial year based on the new minimum amounts and a potentially lower super balance. You may need to adjust your payments to meet your 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, living costs have decreased with coronavirus restrictions on things like dining out and overseas travel so you may choose to decrease your payment rate in line with the 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.