Extension to reduced drawdown rates for account-based pensions a boost for retirees

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Nick BruiningThe West Australian
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Many seniors had their retirement plans thwarted as a result of the pandemic and have been hoarding savings over the past 12 months.
Camera IconMany seniors had their retirement plans thwarted as a result of the pandemic and have been hoarding savings over the past 12 months. Credit: Catherine Yeulet/Getty Images/iStockphoto

The Morrison Government has unveiled a one-year extension to a scheme allowing senior Australians to slash the drawdown rates on their superannuation pensions.

The COVID-19 measure covering account-based pensions was due to expire at the end of this month, but Prime Minister Scott Morrison has extended the reduced drawdown rates to cover all of the new financial year starting on July 1.

Under special concessions introduced last year, seniors with superannuation ABP were allowed to access as much as half their normal annual payments for both the 2019-20 and 2020-21 financial year.

The scheme extension means that someone aged under 65 will still be able draw down as little as 2 per cent of their superannuation balance in an ABP, compared with the pre-COVID minimum of 4 per cent.

And someone aged 90 or more will have a minimum drawdown rate of 7 per cent, compared with the pre-COVID 14 per cent minimum.

Many seniors had their retirement plans thwarted as a result of the pandemic and have been hoarding savings over the past 12 months.

Mr Morrison’s announcement will allow seniors with large balances to keep more of their money in a tax free environment until July 2022, with no indication at this stage whether the concession will be extended beyond that date.

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