The SMSF Association (SMSFA) has written to the federal government asking it to reduce the minimum pension drawdown requirements for superannuation members following a downturn in financial markets due to the coronavirus health crisis.
In a letter addressed to Treasurer Josh Frydenberg, association chief executive John Maroney said the degree of volatility and sizeable falls in global financial markets had raised concerns that minimum pension drawdown requirements might outstrip the ability of markets to replenish investment savings.
“The current minimum withdrawal rates require superannuation members to withdraw money from their superannuation fund faster than desired because the minimum payment amount is based on the account balance at the beginning of the financial year before asset prices had fallen significantly,” Maroney said.
“SMSF members have expressed concern for their retirement balances, the possibility that accounts will not return to pre-crisis levels for an extended period of time and the obligation to continually sell assets during this period to meet the payments requirements.”
He pointed out similar concerns were raised during the global financial crisis, at which time the government halved the minimum drawdown requirements for the financial year, adding: “We urge the government to implement the same temporary reduction in minimum payments for the remainder of the 2019/2020 financial year.”
In an update on its website regarding its wider response to the coronavirus issue, the SMSF industry body stated it would provide members with strategies that could be used with clients to assist them during the current health and financial market crisis.
It was also looking into increasing its online delivery of continuing professional development (CPD) to ensure members were able to meet their CPD requirements and would provide uninterrupted access to its technical research service and existing CPD and education programs.
Association members were also requested to provide input on how the body could support them, including those who were business owners and managers.
“The SMSF Association as a priority is actively monitoring the economic uncertainty resulting from COVID-19. We understand for you, your business and clients these are unchartered waters, and we will make every effort to help you navigate the challenges ahead and continue to ensure your member services are uninterrupted,” it said.