Pension drawdown relief extended to the 2011 year

When a super fund starts paying a pension, it must pay the member a minimum percentage of their pension balance each year (and that minimum percentage increases as the pensioner gets older).

When the Global Financial Crisis hit a few years ago, recognising that some super funds may have cashflow issues, the Government allowed super funds paying out the most common types of pensions to only pay half of what they would otherwise pay in the 2009 and 2010 income years.

As announced by the Treasurer on 30 June 2010, the measure allowing a super fund to apply only half of the relevant percentage when paying out certain pensions has been extended to the 2011 year:

"As in the past two years, the drawdown relief will be in the form of a 50% reduction in the minimum payment amounts for account-based, allocated and market-linked pensions."

This change has been incorporated in the relevant regulations, and is therefore applicable to the 2011 year, notwithstanding the outcome of the Federal election.  As this extension was implemented quite late in the piece many pensions have been set in place at the standard minimum levels, if you would like to reduce your pension to the new minimum levels please check with your adviser or fund to review your options.