If you have a superannuation pension there are minimum withdrawals that you must make from your account each year, in order to maintain the tax-exempt status on your earnings in the superannuation account.
For the last 5 financial years, the Federal Government reduced the minimum pension withdrawals, due to the volatility of the investment markets. The reduction in minimum annual pension payments aimed to help mitigate drawing down on already savaged retirement saving balances, and to minimise forced asset sales to comply with the pension payment rules.
In the 2012-13 financial year, the minimums were 75% of the normal rates. The current 2013-14 financial year marks the return to original pension rates, as listed below by age:
- Under 65…… 4%
- 65 – 74……….5%
- 75 – 79……….6%
- 80 – 84……….7%
- 85 – 89……….9%
- 95 or more…14%
Account-based pensions provide flexibility as you have control over investment options for your account. You can nominate your annual pension amount, as long as it meets or exceeds the minimum rates listed above. Additionally you can withdraw a lump sum if you require. Under these conditions, an account-based super pension is highly tax effective, with tax-exempt earnings on your investment.
If you have any questions about superannuation account-based pensions, please give me a call on 9908 9888.