As part of the Government’s economic response to COVID-19, retirees with account-based pensions can benefit from a temporary 50 per cent decrease in the minimum drawdown rates.

You may be wondering whether to continue withdrawing your money at your previous rate or to take advantage of the reduction. Here are some factors to consider.

1. Withdrawing your pension = Selling your investment

In most cases by drawing down on your pension, you are essentially selling your investment.

Withdrawing your pension from investment options that contain growth assets such as shares or property is likely to result in selling them at a low value and locking in any losses in a falling market such as the one we have been experiencing.

Conversely by taking advantage of the reduced minimum drawdown rates, you will be leaving more of your money invested for the longer term, giving your funds a chance to increase in value when the market recovers.

2. Tax exempt investment earnings

As the Government tightens measures to slow the spread of COVID-19, travel, entertainment and other lifestyle choices for many Australians have been put on hold.

If your plans have been impacted by these changes and you have not withdrawn your pension to pay for these activities, you may consider leaving the funds untouched as the returns that your investments earn in your account-based pension is tax free. Additionally any subsequent withdrawal from your pension typically cannot be put back into your pension account so the benefit of having it retained in the superannuation environment needs to be considered against holding the money in your own name where any returns you receive will be subject to your marginal tax rate.

You could speak to a financial adviser who can assess your overall financial position and provide you with suggestions on how you can manage your money. We have a team of financial advisers who can assist with questions about your pension and financial assets.

3. Pre 1 January 2015 account-based pensions

If you are an owner of an account-based pension purchased before 1 January 2015 and the holder of a Commonwealth Seniors Health Card (CSHC), you may like to check with Centrelink whether there are any impacts of the reduced pension drawdown rates on your Centrelink entitlement.

Any advice contained in this document is of a general nature only, and does not take into account your personal objectives, financial situation or needs. Prior to acting on any information in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek independent financial advice if you are unsure of what action to take. 

Past performance is not a reliable indicator of future performance.


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