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Changes to minimum pension requirements

In response to the current environment, the Government has announced a number of measures to help minimise the impact of current economic conditions on retirees and other Australians. One measure is the temporary halving of the minimum that you must draw from your super pension.

The reduction applies for the 2019/20 and 2020/21 financial years.

Age Default minimum drawdown rates Reduced minimum drawdown rates for 2019/20 and 2020/21
Under 65 4% 2%
65 to 74 5% 2.5%
75 to 79 6% 3%
80 to 84 7% 3.5%
85 to 89 9% 4.5%
90 to 94 11% 5.5%
95 or more 14% 7%

What does this mean for you this financial year?

If you are currently drawing a pension from your super you can chose to:

  1. Make no change. You don’t need to do anything and we will continue to make your payments as usual.
  2. Change your pension to the new minimum or any fixed dollar amount. Please note, maximums for transition to retirement pensions still apply
  3. Suspend your pension until 30 June 2020. This option is available if you have already received more than the reduced minimum pension.

If you wish to make any changes please contact your financial adviser or ClientFirst on 1800 913 118 or by emailing us at clientfirst@ioof.com.au.

What does this mean for the financial year starting 1 July 2020?

The following will apply automatically but you can request a change at any time.

  1. If you have elected to receive the minimum pension amount:
    The reduced minimum pension rate will apply from 1 July 2020. This amount will be significantly lower than your current minimum pension.
  2. If you currently receive a fixed dollar amount, that is, you nominated an amount:
    You will continue to receive the same amount.

We will write to you in early July confirming your pension for 2020-21.

What happens if you receive a term allocated pension?

If you currently receive a term allocated pension, you can typically vary your pension between 90% to 110% of the calculated pension amount as at 1 July each year. The changes allow you to vary your pension between 45% and 110% of the calculated pension amount, effectively allowing for a halving of your TAP minimum pension requirement.

If you wish to make any changes, please contact your financial adviser or contact us.

What else is happening to support retirees?

The Government has also introduced additional payments to Age Pensioners and further reduction in deeming rates. You can find our summary of the other Government's initiatives here.

Further information and Government resources

Information on how  the Government is supporting individuals, households and businesses is on the  Government’s Treasury website

More information is also  available on the ‘COVID19’ section of the ATO website

Addition resources  including tips and calculators is on the  Government’s MoneySmart website

What if you have further questions?

We understand this is a challenging time for many people. If you have any further questions, please contact your financial adviser or contact us.