The Government is reducing the minimum amounts that retired members must draw down from their income accounts by 50 per cent for the 2019/20 and 2020/21 financial years.
This is a temporary measure introduced by the Australian Government on 22 March 2020 as part of its economic reponse to the coronavirus. You can view other non-super support measures for individuals and households on The Treasury website.
Currently, members with an income account must draw down, or withdraw, a minimum amount each financial year. This amount is a percentage of a member’s account balance, with the percentage dependent on their age.
This new measure aims to help retired members manage the impact of volatility in global financial markets, by reducing their need to sell investment assets to fund the drawdown requirements. This will allow them to preserve more of their capital.
What are the minimum drawdown rates?
|Age||Old minimum rates||Rates for 2019/20 and 2020/21|
|95 or more||14%||7%|
- Under 65Old minimum rates4%Rates for 2019/20 and 2020/212%
- 65-74Old minimum rates5%Rates for 2019/20 and 2020/212.5%
- 75-79Old minimum rates6%Rates for 2019/20 and 2020/213%
- 80-84Old minimum rates7%Rates for 2019/20 and 2020/213.5%
- 85-89Old minimum rates9%Rates for 2019/20 and 2020/214.5%
- 90-94Old minimum rates11%Rates for 2019/20 and 2020/215.5%
- 95 or moreOld minimum rates14%Rates for 2019/20 and 2020/217%
How do the new rates apply to me?
If you want to reduce your withdrawals for the current financial year, you can do this by logging into your account.
An example of how the new drawdown rates apply
The Government has reduced deeming rates, to effect from 1 May. The new upper deeming rate is 2.25 per cent, and the lower rate is 0.25 per cent. If you are receiving the Age Pension, the new rates will be automatically applied to your payments.
‘Deeming’ is a way to assess income from financial investments, such as income accounts, savings accounts and term deposits and shares. It’s used to assess eligibility for income support payments, such as the Age Pension.
According to the Government, the reductions in the deeming rates reflect the low interest rate environment and its impact on the income from savings.
The Government stated that the change will benefit around 900,000 income support recipients, including around 565,000 Age Pensioners. On average, they will receive around $105 more of the Age Pension in the first full year the reduced rates apply.
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