Government reduces pension payment minimums

The Federal Government has reduced the minimum annual payments required for account based pensions, allocated pensions and term allocated pensions for the 2008/09 financial year.

What does this mean for pension clients?

This will enable investors to reduce the amount they are withdrawing from their account in the current volatile investment markets.

For example, an account based pension investor aged 62 is currently required to draw down a minimum of 4% of their account balance for the financial year. Under the proposed change, the new minimum payment for the 2008/09 financial year will be reduced to 2% of their account balance as at 1 July 2008 (or pro-rated from the date of commencement) for the 2008/09 financial year. If an investor has already received the minimum (2% in this example) then no further pension payments are required.

How do I reduce my pension payments?

If you would like to reduce your annual pension payments for the 2008/09 financial year by up to 50% of the standard annual minimum please instruct us in writing by mail or fax.

For example, if you we’re receiving the minimum payments based on 4% of your account balance as at 1 July 2008 and have already received payments of over 2%, you could instruct us to make no more payments this financial year, or you could ask us to reduce your remaining payments to a lower amount. We encourage you to speak with your financial adviser before you make any decisions.