The minimum pension drawdown rate will remain halved for another 12 months after the federal government announced an extension of the COVID-19 relief measure that was due to finish at the end of the month.
A joint announcement on 29 May from Prime Minister Scott Morrison and Superannuation, Financial Services and the Digital Economy Minister Jane Hume stated the extension would apply to 30 June 2022.
“As part of the response to the coronavirus pandemic, the government responded immediately and reduced the superannuation minimum drawdown rates by 50 per cent for the 2019/20 and 2020/21 income years, ending on 30 June 2021,” the announcement said.
“Today’s announcement extends that reduction to the 2021/22 income year and continues to make life easier for our retirees by giving them more flexibility and choice in their retirement.
“For many retirees, the significant losses in financial markets as a result of the COVID-19 crisis are still having a negative effect on the account balance of their superannuation pension.”
The 50 per cent reduction in the minimum pension drawdown rate, from 5 per cent to 2.5 per cent, was first announced by the government in March 2020 as part of a wider set of COVID-19 relief measures that also included early access to superannuation and a reduction in deeming rates.
The early access to superannuation measure ended on 31 December 2020 and no further announcements have been made regarding deeming rates.
Earlier this year, the SMSF Association said it expected the rate to return to pre-COVID-19 levels.
At that time, association deputy chief executive and policy and education director Peter Burgess noted the rate may still return to 5 per cent following a scheduled review by the Australian government actuary and a finding in the Retirement Income Review that retirees were not drawing down on their retirement savings.