The Coronavirus crisis has triggered a historical stock market plunge, lowering of interest rates and downward pressure on rent. This translates into massive financial pressure on self-funded retirees during a critical health crisis. The Government’s recent announcements to SMSF minimum drawdown and deeming rules are supporting retirees by potentially putting more money in their pocket and helping them preserve their super for the future.
How are they doing this? By reducing minimum Drawdown and Deeming Rate…
Reduced Minimum Drawdown
The government has halved the minimum drawdown requirement for 2019/20 and 2020/21.
This measure appears against the other government announcements in that it is not directly putting money in hands during this pandemic.
However this measure; consistent with actions taken during the Global Financial Crisis gives Retirees the option to preserve their super and not require the selling assets; at a potential large loss given the current market, in order to satisfy the minimum pension drawdown.
What if I have already withdrawn my minimum pension?
There is no required action prior to 30 June 2020
Can I return any surplus drawdown?
There is currently no process to automatically return excess pension drawdown. You can re-contribute the monies back into the Fund provided you are eligible to contribute and are within the caps.
Reduced Deeming Rates
The government has reduced the deeming rate for financial investments from 1 May 2020.
This measure reflects the reduced interest rates and will increase the amount of full/part age pension received due to the income deemed received being reduced therefore increasing eligibility.
How Walsh SMSF can help?
Walsh SMSF will be supporting our clients by:
- Providing updated minimum pension drawdown requirements,
- Facilitating Centrelink documentation requirements, and
- Processing early access documentation.
We will continue to update you as more information is release as the situation is constantly evolving. Should you have any queries or would like to discuss these changes in relation to your personal circumstances, contact our office today.