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Minimum pension limit reduction

01/04/2020

The SIS Regulations have been amended.  There will be a temporary 50% reduction in the minimum pension limit applicable to the 2019-20 and 2020-21 financial years for allocated pensions, account based pensions and market linked pensions.

 

Reduced minimum pension rates for account based pensions (including allocated pensions)
The reduced rates for minimum pension payments are set out below.

Reduced minimum pension rates for account based pensions (including allocated pensions)

The reduced rates for minimum pension payments are set out below.

 

Age

Rates (after reduction)

Under 65

2%

65-74

2.5%

75-79

3%

80-84

3.5%

85-89

4.5%

90-94

5.5%

95 or more

7%

 

 

Pension drawdown strategy

  • If a member has already withdrawn pension in excess of the new minimum limit for the 2019-2020 financial year, the pension payment can be stopped or re-contributed back to super, subject to contribution eligibility and cap limits.
  • In some circumstances, a member may have to keep up pension payments to meet living expenses, even though they have exceeded the minimum pension limit.  Once the minimum pension amount has been withdrawn, the member will have the option to receive any further payment as a commuted lump sum or pension.  Receiving the payment as a commuted lump sum will result in a debit or reduction to the member’s transfer balance account (currently capped at $1.6 M), thus increasing the available cap space for future income streams, subject to proper documentation. All super benefits paid from a taxed fund are tax-free to a member who is aged 60 and above.