Finance minister Mathias Cormann introduced a discussion paper on retirement income stream regulation. The paper explored changing the minimum withdrawal rates, now set at between 4 per cent and 14 per cent depending on the retiree’s age.
According to Fairfax Media, social services minister Scott Morrison said there would be no changes to the current rates.
“The government has no plans to make any changes to drawdown rates and rejects any suggestion that this is being actively considered by government,” he said. “The government is keen to ensure maximum stability and certainty for superannuation.
“The government respects the fact that, unlike welfare benefits, superannuation savings are generated by the earnings of those who have accumulated them. The extent to which they draw down, other than the minimum requirements as currently stipulated, is up to them.”
For those who live below minimum pension drawdown, they will need to invest surplus pension drawdown outside super and pay normal tax on earnings. This is a tax on old age.
This is a strange decision. You would think that self-funded SMSF members who draw down less (say 2% for example)and who choose to live frugally would make their SMSF funds last longer and not require government support in later life. How this affects ‘stability and certainty’ beats me!