Significant losses in financial markets as a result of the Coronavirus (COVID-19) crisis are negatively affecting the account balance of some retirees’ superannuation pension or annuity. To assist retirees, the Government has reduced the minimum annual payment required for account-based pensions and other income stream products.
Class has implemented the new pension drawdown rates to comply with Coronavirus Economic Response Package Omnibus Bill 2020.
|Age||Default Minimum Drawdown Rate (%)||Reduced Rate by 50% for the 2020 and 2021 Financial Years|
|95 or more||14%||7%|
Andrew was 66 as at 1 July 2019 and his account-based pension balance was $1,222,220.
|Original Pension Minimum||New Pension Minimum||Incorrect Calculation|
|$1,222,220 x 5% = $61,110||$1,222,220 x 2.5% = $30,560||$61,110 x 50% = $30,555|
|The amount is rounded to nearest $10||The amount is rounded to nearest $10||Potentially underpaying the minimum by $5.|
Refer to How to update Pension Review to reflect Temporary 50% Reduction in Minimum Pension Drawdown for more information.