Yesterday the Government announced relief from the minimum draw down percentages for account based pensions.
For the 2009 financial year there will be a 50% reduction in the minimum payment pensioners must take from their account. This means that for people who have already taken half of the current minimum payment, a further payment is not required until the 2010 financial year.
The relief addresses concerns that minimum draw down requirements were set based on asset values at 1 July 2008 and because of factors outside the control of trustees and members, the value of many funds has decreased (sometimes substantially) since then, making it difficult for some funds to find the cash for pension payments. This will mean that many people can avoid having to sell investment assets and realise loses in the current market.
Some funds will not be able to take advantage of this relief. You should ensure that the trust deed for the fund allows the reduced draw down, as some trust deeds recite and entrench the minimum payment percentages set in the Superannuation Industry (Supervision) Regulations and will require a deed variation to allow a lower payment (the Cooper Grace Ward deed will allow the reduction). Also, clients should check pension documents to see if they set the minimum drawdown as a percentage or refer to the minimum required by the SIS Regulations.
The announcement does not address reducing the maximum draw down for transition to retirement pensions, so we expect that remains unchanged.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
