Superannuation
pension drawdown relief announced for 2008-09
The Government has announced that it will temporarily suspend the minimum
drawdown requirements for account-based annuities and pensions for the
second half of 2008-09. Treasurer Wayne Swan and the Minister for
Superannuation and Corporate Law, Senator Nick Sherry, said the measure
responds to concerns that meeting the minimum drawdown amount in 2008-09
would mean retirees having to sell investments assets and realise losses
in a depressed market.
Senator Sherry said the suspension of the minimum drawdown requirements
will occur through a 50% reduction in the minimum payment amount for
2008-09. He said the temporary relief also addresses concerns that the
minimum drawdown requirement was set based on asset values as at 1 July
2008, when equity values were higher.
For those people who have already taken half of the current minimum
payment for 2008-09, the annual nature of the minimum payment rules means
that a further payment will not be required until the end of the 2009-10
year.
The temporary suspension of the minimum payment requirement will apply to:
- account-based annuities and
pensions;
- allocated annuities and
pensions (pre-dating the Better Super changes);
- account-based and allocated
pensions payable from RSAs; and
- market-linked (term allocated)
annuities and pensions.
Currently, it is a requirement
that minimum payments be made from a superannuation account-based pension
at least annually. Minimum payments are determined by age and the value of
the account balance as at 1 July at the start of each financial year under
Sch 7 of the SIS Regs. The minimum annual payment rule is designed so that
retirees draw down on their superannuation capital over their retirement.
The Minister said this rule recognises that superannuation is designed as
a retirement savings vehicle with substantial tax concessions.
The Treasurer said the Government
will continue to closely monitor market conditions and examine options for
a longer term solution to this issue following the Australia's Future Tax
System Review. |
Thomson Reuters
comment Since 1 July
2007, the annual payment rules for account-based pensions and annuities
specify minimum annual limits only. No maximum annual payments apply,
except for transition to retirement pensions which have a maximum annual
payment limit of 10% of the account balance at the start of each financial
year. Therefore, the temporary suspension of the minimum drawdown
requirements for the second half of 2008-09 is voluntary for pensioners.
The implications from this measure can be summarised as follows:
- pensioners who have already
received at least 50% of the minimum pension payments for 2008-09 - no
further pension payments required to be made for 2008-09. The existing
minimum pension payments will resume for the 2009-10 financial year
whereby the next minimum payments for 2009-10 must be made at least by
30 June 2010;
- pensioners who have not yet
made any pension payments for 2008-09 or drawn down below 50% of the
minimum pension payments - pensioner must draw down at least 50% of the
minimum pension payments for 2008-09 before 30 June 2009.
However, a pensioner can continue
to draw a pension at the full minimum drawdown rate or above for 2008-09
(subject to the 10% limit for transition to retirement pensions). The
existing minimum pension payment rules will resume for the 2009-10
financial year.
Amendments to the SIS Regulations
and RSA Regulations will be required to give effect to this measure.
[Source: Treasurer and the
Minister for Superannuation and Corporate Law, joint media release No 013,
18 February 2009 - ATP SIS Regs 1.05, 1.06, Sch 7; ATH Ch 10] by Stuart
Jones
|
