On 22 March 2020 the Government announced the second of their stimulus packages to support Australia through the economic consequences of the Covid-19.
The Government has announced that the minimum pension requirements for 2019/20 and 2020/21 will be re-set to half the normal rates and there will be changes to the deeming rates used to calculate an individual’s income for a range of important government benefits (including the age pension). We have explained these changes in as much detail as is available at the moment here.
Temporary reduction in Minimum Drawdown Requirements
Similar to the approach taken in the 2008/09 Global Financial Crisis, the minimum drawdown requirements for account based pensions and similar products will be temporarily reduced by 50% for the 2019/20 and 2020/21 years.
The revised rates for the 2019/20 and 2020/21 years will be as follows:
The Government’s Fact Sheet says that the reduction will apply to account-based pensions and similar products.
How will the 50% reduction affect pensioners who have already drawn an amount equivalent to their reduced amount before the announcement?
These pensioners will not be required to draw any further pension payments before 30 June 2020.
If a pensioner has already drawn more than their reduced minimum, can they return the surplus pension payments to the fund?
No, there will not be a mechanism to return surplus pension payments. It may, however, be possible for some clients to recontribute the surplus (if they are eligible to contribute and the amount will be within their contribution caps).
Is any action required now?
Pensioners who want to minimise the amount they withdraw from superannuation in the current financial year should turn off/adjust any automatic periodic payment arrangements.
Source: Heffron Consulting