The federal government has announced that it will extend the 50 per cent reduction to minimum superannuation drawdown requirements for retirees into the next financial year.
Originally announced in March 2020 as part of the government’s response to the pandemic, Treasurer Josh Frydenberg said the reduction would now remain in place until 30 June 2023.
“We recognise the valuable contribution self-funded retirees make to the Australian economy and the sacrifices they made to provide for their retirement,” Mr Frydenberg said.
“This will provide retirees with greater flexibility and certainty over their savings.”
Around 1.8 million super accounts are currently subject to the minimum drawdown requirements that apply to account-based pensions and similar products.
Under the reduced minimum drawdown rates, self-funded retirees aged between 65-74 must withdraw 2.5 per cent of their account balance each year to be eligible for tax-free status on their earnings.
The minimum drawdown rate is currently 3.0 per cent for ages 75-79, 3.5 per cent for ages 80-84, 4.5 per cent for ages 85-89, 5.5 per cent for ages 90-94 and 7 per cent for ages 95 and above, while a rate of 2 per cent applies to those under 65.
The government also renewed its commitment to not introduce any new taxes on super.
“At the last election, we promised there would be no new taxes on superannuation. Over the last three years we have honoured that commitment,” said Mr Frydenberg.
“At this election, we are again saying to retirees – under a Morrison government, there will be no increased superannuation taxes.”
The government’s announcement was welcomed by Financial Services Council acting CEO Blake Briggs, who said that stability in superannuation taxes was key to maintaining public confidence in Australia’s retirement system.
“Given recent volatility in financial markets, the government’s commitment to extend the reduction in the minimum drawdown rate is positive as it will protect retirees from crystallising transitory reductions in their superannuation,” he said.
“The FSC is a strong advocate for stability in superannuation taxes so that consumers can plan their retirement with certainty. The FSC welcomes the government’s commitment to making no adverse changes to superannuation tax settings in the next term of the parliament.”
