In response to COVID-19, the Federal Government temporarily reduced the minimum pension payment requirements for account-based pensions, transition to retirement pensions and similar products by 50% for the 2019/20, 2020/21, and 2021/22 financial years. This measure was designed to reduce the need to sell investment assets to fund minimum drawdown requirements, providing Australians with flexibility during uncertain times
This measure was due to expire on 30 June 2022, however, as part of the 2022/23 Federal Budget, the Government has announced this will be extended to 30 June 2023.
Drawdown rates
The minimum amount you need to withdraw from your pension account is determined by both your age and balance as at 1 July each financial year.
The below table highlights both the standard and temporary drawdown rates.
Age |
Standard drawdown rate |
Temporary drawdown rate |
Under 65 |
4% |
2% |
65 to 74 |
5% |
2.5% |
75 to 79 |
6% |
3% |
80 to 84 |
7% |
3.5% |
85 to 89 |
9% |
4.5% |
90 to 94 |
11% |
5.5% |
95 and over |
14% |
7% |
Example
Charlie is 67 years old, and as at 1 July 2022 has an allocated pension with a balance of $750,000. Under the standard drawdown rate, Charlie would need to drawdown at least 5% of his balance, which is $37,500, over the course of the financial year.
However, as the temporary drawdown rates have been extended, he will only need to drawdown 2.5% of his balance, which is $18,750, over the course of the financial year.
Frequently asked questions
We appreciate that you may have questions about this change and what it means for your account, which is why we’ve prepared a list of frequently asked questions.
Seek advice before making changes
Changes in the market and drawdown requirements may prompt you to reconsider your financial position. However, it’s important to understand how your money is invested before considering changes. If you are considering changing your pension drawdown strategy, you may want to speak to a financial adviser before taking action.
As part of your membership, our Helpline Advice team can provide financial advice about your super fund at no additional cost. You can make an appointment with this team by calling our Helpline on 1800 671 369 between 8am-7pm (AEST/AEDT), Monday-Friday.
Disclaimer: This content has been prepared on behalf of Mercer Superannuation (Australia) Limited (‘Mercer Super’), ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust ABN 19 905 422 981. Any advice contained in this content is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this content, you need to take into account your own financial circumstances. Please consider the Product Disclosure Statement, Product Guide, Insurance Guide, and Financial Services Guide before making a decision about the product, or seek professional advice from a licensed, or appropriately authorised financial adviser if you are unsure of what action to take. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2022 Mercer LLC. All rights reserved.