News

Drawdown relief for account-based pensions extended into 2010/2011 financial year

By TechConnect

The Federal Government has announced that it will continue to support self-funded retirees by extending the current drawdown relief provided for account-based superannuation pensions into the 2010-11 year. This will result in a 50 per cent reduction in the minimum payment amount for the 2010-11 year.

The extended drawdown relief of the minimum payment requirement will apply to market-linked pensions (such as allocated, account based, term allocated pensions and non-commutable pensions as part of a transition to retirement strategy).

The drawdown relief over the past two years has helped retirees with account based pensions by reducing the need to sell assets at a loss in order to meet the minimum payment requirement. Extending the drawdown relief for a further year will help retirees to recoup capital losses on their pension portfolios as equity markets recover over time.

This announcement is certainly welcomed news for clients that can take advantage of a lower pension minimum. This continues to provide the opportunity for financial advisers to proactively assist pension clients that would have been forced to withdraw the standard minimum pension payments from 1 July.

Click here to read the joint media release from the office of Senator the Hon Nick Sherry, Assistant Treasurer, and The Hon Chris Bowen MP, Minister for Human Services Minister for Financial Services, Superannuation and Corporate Law.

Conclusion

The industry had expected the reduced minimum pensions would not be extended into the new financial year. This announcement was unexpected and rather late. But we believe this is an appropriate course of action given the recent volatility and uncertainty within the financial markets, which were the catalyst for the reduced minimum pensions in the first place.