10 Jul SMSF minimum pension withdrawal rates have changed
In response to COVID-19, the government temporarily reduced superannuation minimum drawdown requirements for account based pensions by 50% until 30 June 2023.
For this current 2023-24 financial year, the 50% reduction in the minimum pension drawdown rate will no longer apply.
On 1 July 2023, the following rates will apply:
|Age||2023–24 income year|
|95 or more||14.0%|
The member’s age is determined at either:
- 1 July in the financial year in which the payment is made, or
- the commencement day of the pension or annuity, if that is the year in which it commences.
Most income streams paid from a super account held in an individual member’s name are account-based pensions. These pensions are required to meet minimum standards, including not being able to increase the capital supporting the pension using contributions or rollover amounts once the pension has commenced, and paying a minimum amount at least once a year.
In general, minimum payments need to be made at least once a year and are determined by the age of the beneficiary and the value of the account balance as at 1 July each year. For example, people aged between 65 and 74 will need to apply a 5% standard percentage factor to work out the minimum pension amount for 2023–2024.
While the minimum annual payments are mandated, there are no maximum annual payments, except for transition to retirement pensions which have a maximum annual payment limit of 10% of the account balance at the start of each financial year. This means that retirees can draw a pension above the minimum pension payment amount, which may be especially welcome given the current cost of living pressures.