Changes to pensions could halve payments from 1 July

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A government change to superannuation pension payments announced in March could catch out many older Australians when it takes effect on 1 July.

In response to the COVID-19 pandemic, the government announced a temporary 50 per cent reduction in the superannuation minimum drawdown requirement for account-based pensions and similar products for 2019-20 and 2020-21.

What this means is that for some retirees receiving the minimum payment amount from their income account at 30 June this year, the 50 per cent reduction will be automatically applied and their income payments will be reduced unless they take action before their first payment date in July.

Only some super funds are making this change automatically, however, as others are only making the change when they are requested to do so by pension recipients.

The change will not have an effect on those retirees who are receiving an amount more than the minimum drawdown, although there is an option to reduce your payments if you want to try to preserve your balance during the tough economic times.

The minimum payment amount from account-based pension is a percentage of the income account balance at the start of the financial year, or the date your income account started.

The government announced the change in March to provide retirees with more flexibility while markets were volatile.

The change allows retirees to choose to leave more of their retirement savings invested over a longer period, which allows them to keep more funds in their account as markets recover from the pandemic. This measure was also put in place during the global financial crisis.

If you want to make changes to your regular account-based pension payments, you can choose to receive a:

Specified amount – Set payments at a specified amount above the temporary minimum. This could help provide certainty for budgeting. 

– Reduced minimum – Apply to reduce your income account payments to the new minimum payment amounts. If you’re already receiving minimum payment amounts, the 50 per cent reduction will be automatically applied for the 2020-21 financial year by some super funds.

– Non-reduced minimum – Continue to receive the payments at the rate you have been receiving them prior to the change taking effect. If you are receiving the minimum pension payment this change needs to be made before the first July payment for it to apply for the 2020-21 financial year with some super funds.

Were you aware of the coming change to account-based pension payments? Are you changing your payment or will you accept the 50 per cent reduction in payments?

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Written by Ben

48 Comments

Total Comments: 48
  1. 0
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    They have only halved the minimum amount so you can take out less if you want. No one is going to lose anything.

    • 0
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      Yes. It is a very misleading headline designed to get your attention.

    • 0
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      Yes Mark you could call it fake news.

    • 0
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      Agree, another click bait headline, becoming all too familiar. My super will only lower the minimum amount of you specifically request this change, it is not a mandatory option, it is a choice.

    • 0
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      Definitely Fake news. Our Super Fund has kept us fully informed. The Government introduced the change because it is what many retirees have wanted for a long time

    • 0
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      As usual yet another article by this left wing rag to try to make the government look bad. Can you imagine how it may have read if labour were in power, maybe something like this, “Our generous labour government wishing to keep the best interests of self funded retirees at heart very generously halved the minimum draw down on allocated pensions earlier this year. Please make sure your fund does the right thing and doesn’t reduce your payments from the 1st July, and don’t forget to vote for chairman Mao (Albo) in the next election”.

  2. 0
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    “Were you aware of the coming change to account-based pension payments? Are you changing your payment or will you accept the 50 per cent reduction in payments?”

    Yes, we are aware of the allowable reduction and our financial position allows us to take advantage of it which has the effect of increasing our super balance because there is less coming out. Yes we will be continuing with the allowable reduction.

    In saying that, I’m disappointed, although not surprised, that firstly there is a misleading headline which could potentially scare pensioners and secondly doesn’t address the ability to change the drawdown decision at any time. The article suggests that time is running out, hurry, hurry, hurry, before the end of June or you will never be able to do anything about the change. Actually, my reading of the change is that the default position is that a member has to opt in to make the reduction, that it’s not a mandatory reduction.

  3. 0
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    It would be really nice to read a FACTUAL article here once in a while instead of the dramatized garbage we get fed. Payments won’t change unless the recipient asks for changes to be made to their allocated pension. There is nothing automatic about it.

  4. 0
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    I agree with the others. An unnecessary scary headline. The reduction, which I opted for, is voluntary and I thought was perfectly clear. Please don’t confuse those who may not follow Govt speak or journalise.

  5. 0
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    Your headline is somewhat Inflammatory … maybe you should stop and think before you set one. The Pension, as most interpret, IS NOT going to decrease !!! As we all know the halving of the required annual drawdown from Superannuation will revert to what it was before the Covid-19 reduction.
    I just wish you’d cease the bullshit wording of your article headline and be bloody factual and honest!!!!

    • 0
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      Your life choices is seeming more and more like a left wing panic reporter , and I think the reporting is pre planned propaganda, but I got rid of one news media off the little cyber space I have and now find a similarity to YLC to that that I removed. Subtle but definitely a leaning reporter, lift your game Your Life Choices!

  6. 0
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    I am with Telstra super and received advice from them a while ago – this article is misleading and as “retired well” said – no one is going to lose anything.

  7. 0
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    Apart from the confusion the heading of this article adds, the letters sent from some super funds don’t help either making it very unclear whether they are applying the reduction automatically or not. The best thing to do is go online and make it clear what you want done with YOUR money. I believe too that to give your accumulated funds an even better chance of recovering its possible to have 2020/21 payments delayed until the last six months of that financial year.

  8. 0
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    The quality of some article appearing lately is very disappointing.
    This discounts the value of receiving their emails.
    When looking for genuine retirement oriented articles, we now have to wade through sensationalist misleading wastes of our time and patience.
    Sad more than angry.

  9. 0
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    Hi YLC members,
    We value your feedback, thank you for your input and have taken your opinions on board.
    Please be assured that the team will endeavour to be better and deliver the free, quality content you are used to receiving.
    Cheers,
    Leon

    • 0
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      Well if you ever do, then it will certainly be a first. Such a shame that it has taken such an outburst of negative opinions to your posts for you to finally respond this way. In the future if you cannot be more balanced then at least re-name your publication “Your left wing life choices.

    • 0
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      arbee, why do you say that sensational or misleading headings or claims equate to left wing? Are you suggesting the sensationalist and inaccurate headlines in print media like the Telegraph and Australian are left.wing? Do you say that Trump’s and Boris Johnson’s crazy outbursts are left wing? What about Morrison’s half truths and lies eg his latest; Australia never had a slave history or Dutton’s dishonest fear campaigns, are they all left wing?

      If your complaint is about accuracy, where do you stand?

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