SMSF News - edition 20

Reduction in the minimum payment amounts for account-based pensions in 2012-13

The government has announced that pension drawdown relief will continue to be available for the 2012-13 year, extending the drawdown relief available during the 2011-12 financial year.

The minimum payment amounts for account-based, allocated and market-linked (term allocated) pensions will continue to be reduced by 25% for 2012-13. It is believed that about 125,000 self-funded retirees will benefit from this extension.

Minimum payment amounts were halved for account-based pensions in 2008-09, 2009-10 and 2010-11. In 2011-12 they were reduced by 25%.

While the government indicated that the minimum payment amounts would return to normal in 2012-13, equity markets continue to be volatile and extending drawdown relief for a further year will assist retirees to recoup capital losses as equity markets recover over time.