Call for minimum pension relief extension

pension relief AIR

A call has been made for the government to extend the lower minimum pension financial relief measure to include the 2023 financial year.

The Association of Independent Retirees (AIR) has called on the federal government to extend the pension drawdown relief measure that has allowed individuals to halve their minimum pension amounts for the past couple financial years.

Originally the minimum pension was halved for both 2019/20 and 2020/21 as part of financial hardship relief measures given to individuals as a result of the outbreak of COVID-19.

This relief was extended on 29 May 2021 to include the 2022 income year as well and the AIR is now encouraging the government to keep the relief in place for the 2023 financial year due to the continuing uncertainty being experienced by investment markets around the world.

“Retirees who fund some or all of their retirement from superannuation appreciate the flexibility provided by the government with the halving of the superannuation minimum drawdown percentages due to economic effects of the COVID-19 pandemic over these last two years up until 30 June 2022,” AIR president Wayne Strandquist said.

“Capital markets in which retirement savings are invested are not operating normally as a result of the invasion of Ukraine and sanctions imposed on Russia, world supply chain interruptions and fluctuating commodity prices.

“In these circumstances, retirees need greater flexibility in the minimum amount they are required to draw from their superannuation.”

According to Strandquist, the combination of the economic effects of the coronavirus and geopolitical risks arising from the Ukraine conflict means an individual’s retirement savings may not last as long as had previously been expected should they have to draw down higher pension amounts.

“The Association of Independent Retirees seeks the support of the government to extend the reduction to the age-based minimum drawdown percentages for their superannuation account for another year,” he noted.

“This flexibility would enable retirees to have a more sustainable and longer-lasting income from their superannuation.”

The current minimum pension drawdown rate for a person aged 64 or less is 2 per cent, but is set to rise again to 4 per cent in the 2023 income year.

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