Regulations to reduce pension drawdown rate now registered

Late last week, the government registered Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2022.

The regulations extend the temporary reduction in minimum payment amounts for account-based pensions, allocated pensions and market-linked pensions (and for the equivalent annuity products) by half for the 2022-23 financial year.

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The Morrison government first introduced a reduction in the minimum annual payment required for account-based pensions, annuities and market-linked pensions during the pandemic in 2020 and extended the measure for 12 months last year.

The measure was announced in the lead-up to the budget last month and provides retirees with greater flexibility in managing the volatility in investment markets at the moment.

SMSF Association deputy chief executive Peter Burgess previously said that for clients with APRA-regulated funds, it’s worth monitoring any communications the client receives from the fund explaining how they would apply the measure.

“Planners will need to work with their clients to determine whether the minimum pension still meets their client’s income needs,” he said.

“In most cases, where you have previously chosen the minimum pension amount, the fund will automatically apply the 50 per cent reduction, so it’s a matter of assessing whether [it] still meets their needs with regards to cost of living pressures and the like.”