Provided by Mercer: 6/3/09
The government has recently announced relief for pensioners from minimum pension drawdown requirements for the remainder of this financial year.
For members who receive pension income from an allocated pension or transition to retirement pension, there is a specified minimum amount of pension that must be received each year.
In response to concerns that "meeting the minimum draw down amount in 2008 09 will mean having to sell investments assets and realise losses in a depressed market", Treasurer Wayne Swan and Senator Nick Sherry, Minister for Superannuation and Corporate Law, recently announced relief from minimum pension drawdown requirements for the remainder of this financial year.
The way this proposal is to be implemented is that the minimum pension income you must drawdown for the 2008-09 financial year has been reduced by 50% of that which was originally calculated on 1 July 2008.
For example, if a person's minimum pension income was calculated as being $20,000 on 1 July 2008, then their 'new' minimum pension income is calculated as being only $10,000.
What does this mean for you?
If you have already received 50% or more of the minimum pension income required, you can elect not to receive any further income from your pension for the remainder of the 2008/09 tax year.
Alternatively, if your pension income is paid monthly or quarterly, you may be able to reduce your pension income payments for the remainder of this financial year (rather than ceasing them altogether). If your pension income is paid yearly, you will only be required to take 50% of the minimum pension income payment that was calculated on 1 July 2008.
It is our understanding that this change applies only for the year ending 30 June 2009. From 1 July 2009 the rules go back to normal, your pension payments will therefore recommence from the first payment date after 1 July 2009.
You should also note that this announcement has not yet been formalised through changes to the relevant legislation. If you elect to make any changes to your pension based on this announcement and the necessary legislative changes do not reflect the Government’s announcement, or are not made, then it may be necessary to make a top-up payment to you at 30 June 2009 to ensure your pension payments meet the minimum required.
Before making any decision in relation to your regular pension income payments, you should determine exactly what your income needs are for the remainder of the current financial year (and where that income will come from) and ,if necessary, seek appropriate licensed financial advice.
What should I do next?
If you do not wish to reduce your pension income, then you don't need to do anything and you will continue receiving your current pension income as normal.
If you wish to take advantage of this Government announcement and would like to vary, or suspend, your pension income payments for the remainder of this financial year, please contact your super fund to lodge your request.
To ensure your request is actioned before the next pension payment date it is important that you lodge your request as soon as possible.
- If you are a member of the Mercer Super Trust's Allocated Pension Division and you have any questions in relation to this matter, please call 1800 810 558.
- Members of the Mercer Portfolio Service should call 1800 633 403.
This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any investment decision.
