7 June 2011

A Win For Self-Funded Retirees

The Assistant Treasurer, Bill Shorten today announced that around 120,000 self-funded retirees will benefit following the finalisation of regulations providing drawdown relief for account-based pensions in 2011-12.

The Government announced in the 2011-12 Budget that it will reduce the minimum payment amounts for account-based pensions by 25 per cent for the 2011-12 financial year.  This represents a phasing out of the drawdown relief, in the form of a halving of the minimum payment amounts, provided for the past three financial years.

"Many self-funded retirees with account-based pensions incurred significant capital losses on their portfolios due to the effects of the global financial crisis (GFC)," Mr Shorten said. 

"The provision of drawdown relief for the past three years has reduced the need for account-based pension holders to sell assets at a loss in order to meet the minimum payment requirement.  This new relief will assist around 120,000 self-funded retirees to recoup capital losses as markets recover."

"The more limited drawdown relief for 2011-12 recognises the rise in equity markets that has occurred since the GFC. The minimum payment amounts will revert to their normal levels from 2012-13," Mr Shorten said.

The reduction in the minimum payment amounts applies to account-based, allocated and market linked pensions.

The regulations to deliver this change (the Superannuation Industry (Supervision) Amendment Regulations 2011 (No. 1)) have now been finalised and can be found on the Federal Register of Legislative Instruments website at www.comlaw.gov.au.