Overview
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, 2021, 2022 and 2023 Financial Years |
| Under 65 | 4% | 2% |
| 65-74 | 5% | 2.5% |
| 75-79 | 6% | 3% |
| 80-84 | 7% | 3.5% |
| 85-89 | 9% | 4.5% |
| 90-94 | 11% | 5.5% |
| 95 or more | 14% | 7% |
Worked Example
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.
Further Reading
- ATO: Key Superannuation Rates and Thresholds and The Australian Government's economic response to coronavirus
- Treasury: Fact Sheet - Early Access to Superannuation and Fact Sheet - Providing support for retirees
- Heffron: Blog Article - the impact on superannuation benefits for retirees