Around 125,000 self-funded retirees will benefit from an extension of drawdown relief for account-based pensions to the 2012-13 year, with a 25 per cent reduction in the minimum payment amounts for these products.
Assistant Treasurer and Minister for Superannuation, Bill Shorten, said “Many self-funded retirees with account-based pensions incurred significant capital losses on their portfolios as a result of the global financial crisis (GFC).”
“The provision of drawdown relief for the past four years has assisted account‑based pension holders by reducing the need for them to sell assets at a loss in order to meet the minimum payment requirement.”
The Government halved the minimum payment amounts for account‑based pensions for the 2008‑09, 2009-10 and 2010-11 financial years. A more limited form of drawdown relief was provided for 2011‑12, through a 25 per cent reduction in the minimum payment amounts.
“The Government had indicated previously the minimum payment amounts would return to normal in 2012-13. However, equity markets continue to be volatile and prices remain significantly below the levels reached prior to the GFC. Continuing the current limited drawdown relief for a further year will assist retirees to recoup capital losses on their pension portfolios as equity markets recover over time,” Mr Shorten said.
The reduction in the minimum payment amounts will apply to account-based, allocated and market linked pensions.
Regulations giving effect to this change will be made before the new financial year.