Minimum Pension Withdrawals Cut for 2020-21
As part of the economic response to COVID-19, the Government will reduce the superannuation pension minimum drawdown requirements for account-based pensions and similar products by 50% in 2019-20 and 2020-21.
Minimum Pension Rates:
| Age | Default minimum pension drawdown rates (%) | Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%) |
| < 65 | 4 | 2 |
| 65-74 | 5 | 2.5 |
| 75-79 | 6 | 3 |
| 80-84 | 7 | 3.5 |
| 85-89 | 9 | 4.5 |
| 90-94 | 11 | 5.5 |
| 95 + | 14 | 7 |
Example from Government Fact Sheet:
Mike is a 66 year old retiree with a superannuation account-based pension.
The value of Mike’s account-based pension at 1 July 2019 was $200,000. Under current minimum drawdown requirements, legislations requires Mike to drawdown 5% of his account balance over the course of the 2019-20 and 2020-21 income years.
This means Mike has to drawdown $10,000 by 30 June 2020 to comply with the minimum drawdown requirements. Following the temporary reduction in minimum drawdown requirements, the Government only requires Mike to drawdown 2.5% of his account balance, that is, $5,000, by 30 June 2020.
If Mike has already withdrawn over $5,000 for 2019-20, he is not able to put the amount above $5,000 back into his superannuation account. On 1 July 2020 the value of Mike’s account-based pension is $180,000 (after drawdowns and investment losses).
During 2020-21, the Government required Mike to drawdown 2.5% of his account balance, which is $4,500, instead of $9,000. As a result of this change to minimum drawdown requirements, Mike is able to preserve his capital while still drawing an income from his superannuation.
Please contact our Superannuation Manager, David Bishop, with any questions or concerns regarding your superannuation.
For a full list of help and packages available, click here.
This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant.
