Temporary reduction in minimum pension drawdown payments

The Federal Government has temporarily reduced the minimum drawdown rates for account-based pensions, here's what it might mean for you. 

The government is temporarily reducing the minimum drawdown requirements for account-based pensions by 50%. The reduction in minimum drawdown rates aims to provide pension members with more flexibility regarding how they manage their super during these volatile times. 

This initiative was due to expire 1 July 2021, however the Government has announced they will extend the minimum drawdown rates to 1 July 2023. Below is an overview of the previous rates and the new rates which came in to effect 25 March 2020: 

 

Age

Previous rate

New 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%

This reduction applies for the 2019-20, and 2020-21 , 2021-22  and 2022-23 financial years.

How do I change my current draw down rate? 

If you would like to change your current drawdown rate for the financial year 2021-2022 please:

  1. Download and complete the Pension Variation form.
  2. Return the completed form and associated documents to: Mercer Super Trust - Allocated Pension Division, GPO Box 4303, Melbourne, VIC 3001 

Please note, if you select the box for the minimum amount on the form this will be processed as the new minimum definition that the government announced, which is 50% of the previous minimum. If you want to select a specific amount then you will need to write that specific amount on the form.

How long will it take you to process my request?

We will process your request as soon as possible once we receive it in the mail. Due to this recent change in legislation however, we’ve received higher than normal requests and we’re currently doing our best to work through these as fast as we can. 

To understand whether taking advantage of these measures is right for you, we recommend you seek financial advice before taking action.

FAQs on temporary reduction in minimum pension drawdown payments

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  • Can you explain the government changes?

    In response to COVID-19, the Federal Government temporarily reduced the minimum Pension payment requirements for Account-Based Pensions and similar products by 50% for the 2019-20 and 2020-21 income years, ending on 30 June 2021. This initiative was due to expire 1 July 2021, however, the Government has announced they will extend the minimum drawdown rates to 1 July 2023.

    The measures were designed to reduce the need to sell investment assets to fund minimum drawdown requirements, providing you with flexibility during these uncertain times.

  • What happens from 1 July?

    The reduced minimum amounts will be used to calculate your payments in the 2021-22 and 2022-23 financial years. If you have told us that you want to receive the minimum each year, the reduced minimum amount will again be applied automatically from 1 July, 2021.

    If you have told us you want to receive the maximum amount permitted for Transition to Retirement pensions, or that you are receiving a nominated amount (for example your payments are increased by the CPI rate, where your pension allows), you will continue to receive these payments.

  • I don’t want my Pension payment to be reduced, what do I do?

    You can either:

    1. Member Online: Nominate your new Pension payment amount by logging into your online account and editing your current withdrawal details on the ‘Withdrawals’ page. Please note you cannot elect an amount below the minimum payment.
    2. Pension Variation form: Return the completed form to: Mercer Super Trust - Allocated Pension Division, GPO Box 4303, Melbourne, VIC 3001

  • When will I see the changes on my account?

    Your account has been updating to include the new minimums amounts. If you have requested a change to your payments, once complete you will see these updates and receive a confirmation. 

  • Will I still get my pension payments?

    If you have already received more than your updated minimum amount, you have the following options:

    • Stop your regular payments until next financial year; or
    • Receive any remaining payments at the new minimum rate; or
    • Continue to receive your payments as scheduled

  • What are the new temporary minimum drawdown amounts?

    Age

    Previous rate

    New 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%