Superannuation pension drawdown discount gets partial stay of execution
Tuesday 10 May 2011: The Government announced in the Federal Budget that it will phase out the pension drawdown relief that has been available to superannuation fund pension recipients since 1 July 2008. The current drawdown discount of 50% will be slashed in half to 25% for the 2011 - 12 year, and eliminated all together from 1 July 2012.
“This will disappoint many thousands of recipients who are still trying to recover from losses incurred in their funds as a result of the Global Financial Crisis and who were hoping for a continuation of the 50% discount relief,” said John Randall, superannuation partner at Deloitte.
“However, the phase out is preferable to having no relief at all,” he said. “The discount was always positioned by the Government as a temporary measure, and it has probably continued longer than anticipated, to that end this partial stay of execution is welcomed.”
“Those people who had hoped for a continuation of the relief will need to make sure that they have sufficient cash available to draw down the higher rate of pension from 1 July 2011,” Randall said.
“To put it in context, if you are over 65 and have for example $700,000 in your fund, you will now need to draw a $26,250 pension, which is $8,750 higher than under the current discount relief,” Randall explained.
Deloitte’s Federal Budget 2011-12 website
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