(Gary Gleeson)
Each financial year, the government requires you to withdraw a certain amount from your pension – called the minimum amount. In response to COVID-19, the Government has legislated several measures to help minimise the economic impact on Australians. One measure is a temporary halving of the minimum pension payment rates as set out in the table below.
| Age | Previous minimum drawdown rates (% p.a.) | Temporary minimum drawdown rates (% p.a.) 2019-20 and 2020-21 |
| Under 65 | 4% | 2% |
| 65 to 74 | 5% | 2.5% |
| 75 to 79 | 6% | 3% |
| 80 to 84 | 7% | 3.5% |
| 85 to 89 | 9% | 4.5% |
| 90 to 94 | 11% | 5.5% |
| 95 or more | 14% | 7% |
What does this mean for your pension?
Depending on your current instructions, you will have a few options for your pension arrangements. These options are as follows:
- If you have elected to receive the minimum withdrawal amount from your Allocated Pension or Account Based Pension the new reduced minimum will be applied to your account when the new financial year starts on the 1st July 2020. In this instance you do not need to do anything, and the new reduced minimum will be applied to your account automatically, as per the table above.
- If you are currently receiving the minimum from your Allocated Pension or Account Based Pension, however, would prefer to continue to withdraw your current amount of income i.e. you do not want to receive the new reduced minimum, please contact us so we can adjust your income.
- If you have already elected to receive a specified/nominated amount from your Allocated Pension or Account Based Pension you will continue to receive this into the new financial year, and do not need to do anything as this will continue into the new financial year.
- If you are receiving income from a Term Allocated Pension you have the option to temporarily reduce your pension drawdown amount by up to 50%. Your pension payments will not automatically reduce, so if you want to temporarily reduce your payments please let us know or contact us to discuss.
- Finally, if you are unsure about your situation, please contact us so we can discuss your situation and determine what would be appropriate for your situation under these changed circumstances.
Contacting us to provide instruction or to discuss.
Per the previous options listed, please contact us on 03 8394 0300 or send an email to mfmadvice@hillross.mfmgroup.com.au, if:
- You need to change your pension payment amount.
- You wish to discuss your circumstance before deciding on what would be appropriate for your situation.
- Please note, if we have already discussed your pension payments with you, depending on you circumstances, we have or will make the changes to you pensions as agreed.
Any questions
If you have any questions, please contact us as per the details above.
