Pension drawdown relief continues

The Federal Government has announced that the 50% reduction in the mimimum pension payments requirement will continue throughout the 2010-2011 financial year.

This reduction is designed to help self-funded retirees with account-based, allocated and market-linked pensions to recoup capital losses suffered through the Global Financial Crisis and to avoid the need to sell assets held in their superannuation portfolios. At the height of the downturn, many self-funded retirees were forced to sell assets in order to maintain cash flow to meet minimum pension payments.

Continuing the halved minimum pension payments will be seen as welcome relief for self-funded retirees, who will be able to minimise pension drawdowns while their portfolio values recover.

Under legislation, it is a requirement that minimum payments are made from superannuation account-based pensions at least annually. These minimum payments are determined by the investor's age and the value of the account balance as at 1 July.

Once the reduced pension payments are ratified for 2010-2010, the required minimum payments will be as follows: