Buckle up because we're diving into the complex world of superannuation income phases and tax breaks.

Yes, we know it sounds dreadful, but it's worth the read when tax breaks and your hard-earned money are at stake.

As of July 1, the 50 per cent minimum pension drawdown ‘discount’ has been removed. Simply put, this allowed superannuants to withdraw only half of what they usually ‘had to’, based on their age.

Now, for those sitting on a defined-benefit pension with guarantees on income levels, you can relax.

Act now to avoid being caught out, as the pension drawdown minimums have changed. Image by jhenning from pixabay

But for the rest dealing with allocated pensions, account-based ones, as well as market-linked and transition to retirement pensions, you’ll want to pay attention.

This income concession was set in place during the initial wave of COVID-related financial panic when super balances took a hit. However, as stock markets stabilise, the concession has now been revoked.

But what's the concern? Well, fall short of the minimum pension withdrawal, and you're looking at a financial penalty.

The Australian Taxation Office (ATO) will consider your income stream to have stopped, treating all payments as super lump sum amounts.

The shortfall cannot be rectified at the beginning of the next financial year either.

The ATO doesn’t work that way. You get super tax concessions in the retirement phase that equates to 0 per cent tax on earnings compared to 15 per cent while you're still in the accumulation phase.

So, the government wants you to go ahead and withdraw that money.

Super funds have their trustees looking after compliance with the minimum pension requirements. If that's not you, hopefully, you'll get a heads-up. However, be prepared.

As of July 1, the 50 per cent minimum pension drawdown ‘discount’ has been removed. Image by stevepb from pixabay

Even if you make the right withdrawals next year and play by the books, starting a new pension would be in order. This means trustees must value the assets again in the current market and re-calculate the new minimum pensions.

Now, you must be thinking, 'What are these reinstated withdrawal requirements?'

According to the ATO’s schedule, these rates depend on your age.

Your age and account balance on July 1 in the financial year when the payment is made determines the balance. If your pension starts after July 1, your balance on the commencement day will be considered to calculate the minimum payment.

For instance, if you are 64 years old and started an income stream on July 1, 2023, with $600,000, your minimum pension amount would be $600,000 x 4 per cent = $24,000.

So, you must withdraw $24,000 across the 2023-24 financial year.

To find the new age-based rates, please refer to the image below, which outlines the minimum percentage of account balance factors based on age:

Minimum percentage of account balance factors. Source: ATO

Remember, it doesn’t matter how you receive your pension payments—monthly, quarterly, or even less frequently—the annual minimum remains the same.

Key Takeaways

• The 50 per cent minimum pension drawdown 'discount' that allowed superannuants to cut their withdrawals in half has been removed as of July 1.
• If the minimum pension amount required is not withdrawn in any given financial year, the Australian Taxation Office (ATO) deems that the income stream has stopped, and all payments made during that year are treated as super lump sums.
• The tax concession in the retirement phase is a 0 per cent tax on earnings. If not withdrawn accordingly, there will be financial consequences.
• The super fund trustee is responsible for ensuring minimum pension requirements. Even if the necessary withdrawals are made the following tax year, you have effectively started a new pension, and the trustee must re-value assets in the current market conditions and recalculate the minimum pension.

Despite how complex this might seem, the key takeaway is ensuring you meet the minimum pension withdrawal requirements to keep your tax breaks intact.

We hope this sheds some light on the updated pension drawdown rules.

Members, what are your overall impressions of the updated pension drawdown rules? Share your thoughts on how this may impact you and your financial planning for retirement.

 

[Shane/#]

Buckle up because we're diving into the complex world of superannuation income phases and tax breaks.

Yes, we know it sounds dreadful, but it's worth the read when tax breaks and your hard-earned money are at stake.

As of July 1, the 50 per cent minimum pension drawdown ‘discount’ has been removed. Simply put, this allowed superannuants to withdraw only half of what they usually ‘had to’, based on their age.

Now, for those sitting on a defined-benefit pension with guarantees on income levels, you can relax.

View attachment 25748

Act now to avoid being caught out, as the pension drawdown minimums have changed. Image by jhenning from pixabay

But for the rest dealing with allocated pensions, account-based ones, as well as market-linked and transition to retirement pensions, you’ll want to pay attention.

This income concession was set in place during the initial wave of COVID-related financial panic when super balances took a hit. However, as stock markets stabilise, the concession has now been revoked.

But what's the concern? Well, fall short of the minimum pension withdrawal, and you're looking at a financial penalty.

The Australian Taxation Office (ATO) will consider your income stream to have stopped, treating all payments as super lump sum amounts.

The shortfall cannot be rectified at the beginning of the next financial year either.

The ATO doesn’t work that way. You get super tax concessions in the retirement phase that equates to 0 per cent tax on earnings compared to 15 per cent while you're still in the accumulation phase.

So, the government wants you to go ahead and withdraw that money.

Super funds have their trustees looking after compliance with the minimum pension requirements. If that's not you, hopefully, you'll get a heads-up. However, be prepared.

View attachment 25749

As of July 1, the 50 per cent minimum pension drawdown ‘discount’ has been removed. Image by stevepb from pixabay

Even if you make the right withdrawals next year and play by the books, starting a new pension would be in order. This means trustees must value the assets again in the current market and re-calculate the new minimum pensions.

Now, you must be thinking, 'What are these reinstated withdrawal requirements?'

According to the ATO’s schedule, these rates depend on your age.

Your age and account balance on July 1 in the financial year when the payment is made determines the balance. If your pension starts after July 1, your balance on the commencement day will be considered to calculate the minimum payment.

For instance, if you are 64 years old and started an income stream on July 1, 2023, with $600,000, your minimum pension amount would be $600,000 x 4 per cent = $24,000.

So, you must withdraw $24,000 across the 2023-24 financial year.

To find the new age-based rates, please refer to the image below, which outlines the minimum percentage of account balance factors based on age:

View attachment 25750

Minimum percentage of account balance factors. Source: ATO

Remember, it doesn’t matter how you receive your pension payments—monthly, quarterly, or even less frequently—the annual minimum remains the same.

Key Takeaways

• The 50 per cent minimum pension drawdown 'discount' that allowed superannuants to cut their withdrawals in half has been removed as of July 1.
• If the minimum pension amount required is not withdrawn in any given financial year, the Australian Taxation Office (ATO) deems that the income stream has stopped, and all payments made during that year are treated as super lump sums.
• The tax concession in the retirement phase is a 0 per cent tax on earnings. If not withdrawn accordingly, there will be financial consequences.
• The super fund trustee is responsible for ensuring minimum pension requirements. Even if the necessary withdrawals are made the following tax year, you have effectively started a new pension, and the trustee must re-value assets in the current market conditions and recalculate the minimum pension.

Despite how complex this might seem, the key takeaway is ensuring you meet the minimum pension withdrawal requirements to keep your tax breaks intact.

We hope this sheds some light on the updated pension drawdown rules.

Members, what are your overall impressions of the updated pension drawdown rules? Share your thoughts on how this may impact you and your financial planning for retirement.

As a self-funded retiree I'm taking out a bit more than the 4% of my super account at under 65 years old

 

[rainide]

Hi ThereseT, I'm sorry you have totally confused me. Lorraine de

 

[HamMcG]

Thanks for the info, but I don't know who wouldn't know this. If you have an income stream taking out the minimum your financial institution would have advised you of the new figure on July 1 and will you will have received double the usual amount in the first payment in July. If you are managing your own fund and don't know this, you probably shouldn't be managing your own fund.

 

[Jaleah]

Buckle up because we're diving into the complex world of superannuation income phases and tax breaks.

Yes, we know it sounds dreadful, but it's worth the read when tax breaks and your hard-earned money are at stake.

As of July 1, the 50 per cent minimum pension drawdown ‘discount’ has been removed. Simply put, this allowed superannuants to withdraw only half of what they usually ‘had to’, based on their age.

Now, for those sitting on a defined-benefit pension with guarantees on income levels, you can relax.

View attachment 25748

Act now to avoid being caught out, as the pension drawdown minimums have changed. Image by jhenning from pixabay

But for the rest dealing with allocated pensions, account-based ones, as well as market-linked and transition to retirement pensions, you’ll want to pay attention.

This income concession was set in place during the initial wave of COVID-related financial panic when super balances took a hit. However, as stock markets stabilise, the concession has now been revoked.

But what's the concern? Well, fall short of the minimum pension withdrawal, and you're looking at a financial penalty.

The Australian Taxation Office (ATO) will consider your income stream to have stopped, treating all payments as super lump sum amounts.

The shortfall cannot be rectified at the beginning of the next financial year either.

The ATO doesn’t work that way. You get super tax concessions in the retirement phase that equates to 0 per cent tax on earnings compared to 15 per cent while you're still in the accumulation phase.

So, the government wants you to go ahead and withdraw that money.

Super funds have their trustees looking after compliance with the minimum pension requirements. If that's not you, hopefully, you'll get a heads-up. However, be prepared.

View attachment 25749

As of July 1, the 50 per cent minimum pension drawdown ‘discount’ has been removed. Image by stevepb from pixabay

Even if you make the right withdrawals next year and play by the books, starting a new pension would be in order. This means trustees must value the assets again in the current market and re-calculate the new minimum pensions.

Now, you must be thinking, 'What are these reinstated withdrawal requirements?'

According to the ATO’s schedule, these rates depend on your age.

Your age and account balance on July 1 in the financial year when the payment is made determines the balance. If your pension starts after July 1, your balance on the commencement day will be considered to calculate the minimum payment.

For instance, if you are 64 years old and started an income stream on July 1, 2023, with $600,000, your minimum pension amount would be $600,000 x 4 per cent = $24,000.

So, you must withdraw $24,000 across the 2023-24 financial year.

To find the new age-based rates, please refer to the image below, which outlines the minimum percentage of account balance factors based on age:

View attachment 25750

Minimum percentage of account balance factors. Source: ATO

Remember, it doesn’t matter how you receive your pension payments—monthly, quarterly, or even less frequently—the annual minimum remains the same.

Key Takeaways

• The 50 per cent minimum pension drawdown 'discount' that allowed superannuants to cut their withdrawals in half has been removed as of July 1.
• If the minimum pension amount required is not withdrawn in any given financial year, the Australian Taxation Office (ATO) deems that the income stream has stopped, and all payments made during that year are treated as super lump sums.
• The tax concession in the retirement phase is a 0 per cent tax on earnings. If not withdrawn accordingly, there will be financial consequences.
• The super fund trustee is responsible for ensuring minimum pension requirements. Even if the necessary withdrawals are made the following tax year, you have effectively started a new pension, and the trustee must re-value assets in the current market conditions and recalculate the minimum pension.

Despite how complex this might seem, the key takeaway is ensuring you meet the minimum pension withdrawal requirements to keep your tax breaks intact.

We hope this sheds some light on the updated pension drawdown rules.

Members, what are your overall impressions of the updated pension drawdown rules? Share your thoughts on how this may impact you and your financial planning for retirement.

The government makes it hard for those who don’t understand…they keep changing the rules

 

[Littleboy8]

Hi ThereseT, I'm sorry you have totally confused me. Lorraine de

Me too

 

[Cheezil]

What on earth does all that mean? So bloody confusing! So many rules, its our bloody money, but we're not allowed to do what we want with it. Easy to contribute to super but almost impossible to access it when you need it!

 

[rainide]

Thanks for the info, but I don't know who wouldn't know this. If you have an income stream taking out the minimum your financial institution would have advised you of the new figure on July 1 and will you will have received double the usual amount in the first payment in July. If you are managing your own fund and don't know this, you probably shouldn't be managing your own fund.

Well, that's totally rude, the reason I informed you I was confused is because of the way it explained. clear as mud

 

[Lei]

Can I have that in layman’s terms?

 

[Macarj]

The government makes it hard for those who don’t understand…they keep changing the rules

That's not a new rule

 

[WriterlySloth]

What I would really like to see here in these responses, is a little compassion. We may all be of an age, but it’s considered a kindness to realise that we all have different strengths, and differing weaknesses.

Making condescending comments only makes the person making such comments out to be the nasty person they are.

Learning can happen at every stage of life… how about accepting that fact and we let people make comments about their lack of comprehension so that they can be informed… without being belittled. That is, after all, what this information dissemination is all about.

I come in here (to The Club), less and less these days because I simply cannot stomach watching some of you not adding to the forum, but simply making derogatory comments either about what’s been written for our edification or about the respondents comments.

Seriously, not all of us say what we think. And not everything that we think should be shared.

 

[Littleboy8]

What I would really like to see here in these responses, is a little compassion. We may all be of an age, but it’s considered a kindness to realise that we all have different strengths, and differing weaknesses.

Making condescending comments only makes the person making such comments out to be the nasty person they are.

Learning can happen at every stage of life… how about accepting that fact and we let people make comments about their lack of comprehension so that they can be informed… without being belittled. That is, after all, what this information dissemination is all about.

I come in here (to The Club), less and less these days because I simply cannot stomach watching some of you not adding to the forum, but simply making derogatory comments either about what’s been written for our edification or about the respondents comments.

Seriously, not all of us say what we think. And not everything that we think should be shared.

Hear hear well said

 

[Pudpye]

What on earth does all that mean? So bloody confusing! So many rules, its our bloody money, but we're not allowed to do what we want with it. Easy to contribute to super but almost impossible to access it when you need it!

You can do what you like with your money but if you want a concession from the taxpayers there is a minimum you have to withdraw. If you want to forgo the concession withdraw whatever you like.

 

[rehandra]

Thanks for the info, but I don't know who wouldn't know this. If you have an income stream taking out the minimum your financial institution would have advised you of the new figure on July 1 and will you will have received double the usual amount in the first payment in July. If you are managing your own fund and don't know this, you probably shouldn't be managing your own fund.

Thankfully hubby has an allocated pension managed by others and they just sent him a letter detailing all this.