Reduced super minimum drawdown rate extended

The Australian government has announced an extension of the temporary reduction in superannuation minimum drawdown rates to 30 June 2022.

As a pandemic response, the government had reduced the superannuation minimum drawdown rates by 50% for the 2019-20 and 2020-21 income years. The latest announcement extends that reduction to another year.

National Seniors Australia, a not-for-profit organisation representing older Australians, welcomed the decision.

“This is great news for self-funded and part self-funded retirees whose nest eggs took a big hit in the COVID financial crisis which followed the outbreak,” said National Seniors Chief Advocate, Ian Henschke.

For someone aged less than 65 this means they will still be able drawdown as little as 2% of their superannuation balance in an account-based pension, compared with the pre-COVID minimum of 4%, according to National Seniors. And someone aged 95 or more will have a minimum drawdown rate of 7%, compared with the pre-COVID minimum rate of 14%.

“This extension will make a difference to many retirees who were worried about their future savings and income,” said Henschke.

Last year, the Alliance for Fairer Retirement System, which is composed of a number of organisations including National Seniors and the Australian Investors Association, called for reduction in the superannuation minimum drawdown rate during the pandemic.

The government responded by reducing the minimum drawdown rate by 50% and this was due to end on 30 June 2021, and it has now extended that for the 2021-22 financial year.