Extension of minimum pension drawdown reduction
That’s a mouthful! Let’s break this down.
What is the pension drawdown rate?
If you have an account-based pension, each year you need to take out a minimum amount from your pension account as a form of income. This amount is the minimum pension drawdown rate. It’s a percentage of your starting balance on 1 July of the current financial year, and it also depends on your age.
What is the proposal?
To relieve financial pressure on retirees during COVID-19, in 2020 the Federal Government reduced the minimum drawdown rates for account-based pensions and similar products by 50%. This was intended as a temporary measure, but the Government has announced that it would be extended for another year until 30 June 2023.
Given ongoing market volatility, this change will allow retirees to avoid selling assets to satisfy the minimum drawdown requirements.