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Reduced minimum drawdown rates for pensions

News | Date Posted: 24 June 2020

There are lots of benefits of holding an account-based pension, but it also means you need to follow some rules. One of these rules is the amount of money you need to draw down each year. 

In response to COVID-19, the Government is providing financial assistance to support Australians in many ways. One of these measures is a reduction in minimum drawdown amounts for the 2019-20 and 2020-21 financial years. This temporary reduction in drawdown rates was introduced to benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.

New rates for the 2020-21 financial year

If you currently receive the minimum annual drawdown amount, your payment in the new 2020-21 financial year will automatically be based on the new rates (which are reduced by 50% compared to the 2019-20 financial year), unless you notify your super fund to change your payment amount.

How to calculate your minimum payment amount

Minimum annual payments are calculated based on your account balance as at 30 June each year, multiplied by a percentage based on your age. You can calculate your minimum payment amount by using the new percentages below – but note, you’ll need to wait until your balance as at 30 June 2020 is available.

 Age  Annual min. payment as % of account balance
 55—64  2%
 65—74  2.5%
 75—79  3%
 80—84  3.5%
 85—89  4.5%
 90—94  5.5%
 95+  7%

Source: moneysmart.gov.au

More information

Mine Super pension members will soon receive a letter from us to confirm their new pension payment details for the 2020-21 financial year. If you’d like to make changes to your payment amounts or frequency, simply complete the form and send it back to us. And don’t forget, you can update your pension payment amount at any time throughout the year, check out this web page for more detail. 

To ensure the health and safety of our staff and members, we can’t offer face to face appointments at the moment, but members can still get in touch with someone from Mine Super Financial Advice by filling out this form or calling us on 13 64 63. We can then arrange an appointment over the phone or via video conference.