MINIMUM PENSION PAYMENTS HALVED FOR 2010/2011 YEAR

The drawdown relief provided for account-based pensions during the 2009/2010 and 2008/2009 financial years will NOW be extended for the 2010/2011 year. This is great news for retirees attempting to preserve capital, although the announcement may be cold comfort for those retirees who still need to sell assets to provide a regular income.

Briefly, what the extension of payment relief means for individuals receiving superannuation income streams, is that for the 2010/2011 year, the minimum payment amounts for account-based pensions will continue to be half of the normal requirements. For example, an individual aged 65 must withdraw 2.5% of his account balance for the 2010/2011 year, rather than 5% under the regular minimum pension payment rules.

The temporary minimum pension payment relief applies to account-based pensions and annuities (payable since 1 July 2007); allocated pensions and annuities, and market-linked (term allocated) pensions and annuities.

	Regular Percentage Factors	Temporary Relief
		2010/2011 year	2009/2010 year
Age
55-64	4%	2%	2%
65-74	5%	2.5%	2.5%
75-79	6%	3%	3%
80-84	7%	3.5%	3.5%
85-89	9%	4.5%	4.5%
90-94	11%	5.5%	5.5%
95 or older	14%	7%	7%

Note: Amount calculated on 1 July each year, unless first year of account-based income stream, and the pro-rated from commencement day. Minimum amount to be rounded to nearest $10.