The federal government’s extension of the reduction in minimum pension drawdown rates until 30 June 2022 has been welcomed by the SMSF sector, despite its unexpected and perceived election-focused nature.
SuperConcepts SMSF technical specialist Anthony Cullen said the issue was not raised in the recent federal budget and “in the weeks since the budget I have spoken to staff, professionals and trustees alike, stating that with most markets back to, or around, their pre-COVID levels and with no mention of an extension to the reduced limits in the budget, it was unlikely to happen”.
“The announcement suggests that the reduction will remain at the 50 per cent level. However, it is worth noting that changes to the regulations are still required for this to actually occur,” Cullen said in an update on the SuperConcepts website.
“Having said that, there is no reason to believe these changes will not go ahead. This should give some comfort to those drawing down on their superannuation and allow them to start planning for the upcoming financial year.”
Smarter SMSF chief executive Aaron Dunn said the extension was a “move that clearly puts a stake in the ground to target self-funded retiree voters in the lead-up to the next election”.
“The decision by the government to extend this measure provides members with a number of important considerations about how benefit payments are drawn over the financial year,” Dunn said in an update on his website.
Dunn noted that in the previous financial year many pension members were likely to have withdrawn more than the 50 per cent reduced minimum and will need to plan accordingly for this financial year and the next one if the extension is implemented.
Also commenting online on the extension, Heffron head of SMSF technical and education services Lyn Formica said it only lengthened current temporary rules and only halved the drawdown rates themselves and not the payment amount.
“There is no halving of the maximum applicable to transition-to-retirement income streams or marked-linked pensions,” Formica said.
“The current $100,000 per annum threshold for market-linked pensions is also not halved.”