The Australian government stipulates the minimum pension payment (or drawdown rate) most pension or annuity account holders must take each financial year (for pension and annuity accounts that commenced after 1 July 2007). The minimum pension payment account holders must take each financial year is calculated on an aged-based percentage factor of your pension account balance at the start of each financial year.
To assist Australian retirees preserve their superannuation during Covid (and the increased investment market volatility), the Australian Government temporarily reduced the minimum pension percentage by 50% for the 2020, 2021, 2022 and 2023 financial years. As confirmed in the Federal Budget (and anticipated by 5 Financial), this temporary reduction ends on 30 June 2023.
From 1 July 2023, the temporary reduction in minimum pension drawdown rates will cease.
The following new minimum pension drawdown rates will apply to both new and existing (post 2007) pension accounts:
If you’re impacted by this change, you’ll notice a difference when you receive your first pension payment in the new financial year.
Importantly, there continues to be no maximum pension amount, except for transition to retirement accounts (TTR), where a maximum pension rate of 10% of your account balance remains.
If you'd like to speak to a Financial Adviser on how to best navigate these changes, please call us on (02) 9739 6555 to arrange an obligation-free chat.