Changes to minimum annual payments for superannuation income streams
Government Covid-19 relief measures gave a temporary reduction to the minimum amount required to be withdrawn from superannuation income streams. This relief has now stopped so you need to be aware of the change to the minimum pension payment drawdown amounts from 1 July 2023 if you are receiving a superannuation income stream.
Superannuation income streams from account-based pensions or transition to retirement pensions require a minimum amount to be paid at least once a year. The amount payable depends on the account balance and the age of the member (which increases as you get older).
In response to Covid-19, the government temporarily reduced the minimum drawdown amounts by 50% from 1 July 2019 to 30 June 2023. However, from 1 July 2023, minimum drawdown amounts are reverting to the amounts required prior to the pandemic.
This will basically mean that, depending on your balance on 1 July 2023, your required minimum pension drawdown from your superannuation pension will be approximately double what was required in the previous year (possibly more if you have gone up an age bracket or had some well performing investments so that your member balance has increased).
If you are receiving your income stream from an industry fund, you will need to contact them to ensure that your pension payments have reverted to the higher amount.
If you are receiving your income stream from a self-managed superannuation fund, as trustee of the fund, you will need to ensure there is sufficient cashflow to meet the increased minimum pension payment required. Note you have until 30 June 2024 to ensure the minimum amount has been paid, so if assets need to be sold or investments rearranged, you have time.
Here is a table of the minimum pension drawdown percentages which are applied to your account balance to determine the minimum amount.
|Minimum pension drawdown % for 2023/2024 year|
|95 or older||
Age is determined on either 1 July of the financial year for which the payment relates or if a new pension, the commencement date of the pension.
Account balance means the pension account balance on 1 July of the financial year for which the payment relates or if a new pension, the balance at commencement.
The above information is only general in nature and should not be considered specific advice. Each individual’s circumstances need to be assessed. For more information on any of the above please book an appointment at Avance.