Drawdown relief for all pensions

 

The reduced minimum pension relief that will now apply for the 2022 financial year is not restricted to account-based pensions, said a legal specialist.

 

       

A legal specialist has reminded the SMSF sector the extension of the COVID-19 minimum pension relief applies to all income streams and is not the sole domain of account-based pensions.

In May, the federal government announced the minimum pension would continue to be half the conventional rate for the 2022 income year, even though this was originally a coronavirus financial relief measure set to expire at 30 June this year. For individuals aged 64 or under, it means the minimum pension for the coming financial year will be 2 per cent and not 4 per cent.

Super Central self-managed superannuation executive consultant Michael Hallinan confirmed these rules will apply to transition-to-retirement income streams, as well as market-linked pensions.

“Consequently for the 2021/22 financial year, the minimum payment from your transition-to-retirement pension will be 2 per cent rather than 4 per cent,” Hallinan said.

Hallinan did, however, point out the maximum amount an individual can draw down for 2021/22 will stay at 10 per cent of the transition-to-retirement pension account balance at 1 July 2021.

He also noted the relief would apply to market-linked pensions, also referred to as term-allocated pensions, even though the required drawdown amounts for these income streams are calculated in a different manner using upper and lower limits.

“The lower and upper limits are calculated, respectively, as 90 per cent and 110 per cent of a calculated amount for the financial year. The calculated amount is the pension account balance (as at 1 July 2021) divided by a prescribed factor, which is related to the remaining term of the pension,” he said.

“As the minimum drawdown relief also applies to market-linked pensions, the lower limit for the 2021/22 financial year will be 45 per cent of the calculated amount rather than 90 per cent.”

 

 

Darin Tyson-Chan
June 30, 2021
smsmagazine.com.au

 

More Articles

Most Reliable Car Brands in 2026

Check out which car brands are the most likely to stay on the road and not cost you a fortune to...

Read full article

Super versus trusts: What is the best option with Div 296?

Super used to be clearly the “best” option due to low tax rates but the increasing complexity of things...

Read full article

AI use needed with proper safeguards

The SMSF Association has suggested practitioners servicing the sector must equip themselves with more than...

Read full article

Thinking of establishing an SMSF? Don’t skip reading the rules

As the establishment of new SMSFs continues to rise, the ATO is reminding potential trustees to ensure they...

Read full article

Are downsizer contributions losing steam?

Tax Office data shows fewer people used its super scheme in 2024-25 . Introduced in 2018, the home...

Read full article

Investment and economic outlook, February 2026

latest forecasts for investment returns and region-by-region economic outlook . Australia A rate...

Read full article

Coercive control in SMSF becoming a hot issue

AFCA is anticipating there will be more focus on coercive control and elder abuse going...

Read full article

What to look for when choosing a financial adviser

Here's how to find a financial adviser who can provide the right support for you . We believe...

Read full article

Heathmont Financial Services Pty Ltd (ABN 68 106 250 104) trading as Heathmont Financial Services is a Corporate Authorised Representative (No. 262098) of Knox Wealth Management Pty Ltd (ABN 74 630 256 227), Australian Financial Services Licence Number (AFSL) 513763.

Julian McGoldrick is an Authorised Representative (No. 262098) of Knox Wealth Management Pty Ltd AFSL 513763.

Financial Services Guide - Disclaimer & Privacy Policy

^