In 2020 as part of the Government’s response to COVID-19, the minimum drawdown rates for SMSF members receiving an income stream were reduced by 50%. This was in response to the fact that at the time, many retirees may have had significant financial losses due to the effect that COVID was having on financial markets at the time. This applies to account-based pensions and annuities, allocated pensions and annuities, and market-linked pensions and annuities
Now, even though asset markets have recovered (with share markets in particular hitting all time highs recently), the Government has extended this temporary measure until 30 June 2022. So all up, these measures will apply to the 2019–20, 2020–21 and the 2021–22 financial years.
If a SMSF member is age 65 to 74, they would normally have a minimum drawdown of 5.0%. This means that if they have an existing account based pension of say $500,000 (valued at 1 July 2021), they would normally have to draw out at least 5% ($25,000) over the course of the 2021/22 financial year. However with the 50% reduction, they only need to draw out $12,500 as the 50% reduction continues until 30 June 2022.
Here are the minimum percentages for each age group:
|Age||2013–14 to 2018–19 income years (inclusive)||2019–20 to 2021–22 income years (inclusive)|
|95 or more||14.0%||7%|
Note: These withdrawal factors are indicative only, and the precise amounts for your personal situation should be assessed by a financial professional.
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