The reduced minimum pension relief that will now apply for the 2022 financial year is not restricted to account-based pensions, said a legal specialist.

A legal specialist has reminded the SMSF sector the extension of the COVID-19 minimum pension relief applies to all income streams and is not the sole domain of account-based pensions.

In May, the federal government announced the minimum pension would continue to be half the conventional rate for the 2022 income year, even though this was originally a coronavirus financial relief measure set to expire at 30 June this year. For individuals aged 64 or under, it means the minimum pension for the coming financial year will be 2 per cent and not 4 per cent.

Super Central self-managed superannuation executive consultant Michael Hallinan confirmed these rules will apply to transition-to-retirement income streams, as well as market-linked pensions.

“Consequently for the 2021/22 financial year, the minimum payment from your transition-to-retirement pension will be 2 per cent rather than 4 per cent,” Hallinan said.

Hallinan did, however, point out the maximum amount an individual can draw down for 2021/22 will stay at 10 per cent of the transition-to-retirement pension account balance at 1 July 2021.

He also noted the relief would apply to market-linked pensions, also referred to as term-allocated pensions, even though the required drawdown amounts for these income streams are calculated in a different manner using upper and lower limits.

“The lower and upper limits are calculated, respectively, as 90 per cent and 110 per cent of a calculated amount for the financial year. The calculated amount is the pension account balance (as at 1 July 2021) divided by a prescribed factor, which is related to the remaining term of the pension,” he said.

“As the minimum drawdown relief also applies to market-linked pensions, the lower limit for the 2021/22 financial year will be 45 per cent of the calculated amount rather than 90 per cent.”

When was the last time you reviewed your Superannuation or SMSF?  Get in touch with the Centra team and schedule a complimentary and no-obligation meeting now to ensure you are on track to achieve your goals.  Our number is 08 8231 4709 or info@centrawealth.com.au

Article reproduced from smsmagazine.com.au

Take The Next Step, Book an Appointment
Contact Us

Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.