Bring back pension drawdown relief, says Taxpayers Australia

Nest egg, superannuaiton, SMSF, retirement
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superannuation, account based pension, minimum drawdown, drawdown relief, Taxpayers AustraliaTaxpayers Australia is calling for the reintroduction of pension drawdown relief, as low interest rates are forcing SMSFs to restructure their investments to fund pension payments

The organisation said the minimum drawdown requirements on account based pensions are “too high in an environment where deposit interest rates offered by financial institutions are giving SMSF trustees minimal returns”.

“When in pension mode, the drawdown amount can cause unnecessary restructuring of the SMSF investment strategy to ensure sufficient cash to make these payments.”

“Our members are being forced to sell down capital assets such as real property and long-term share portfolios to make drawdowns that they don’t want or need to make,” said Moti Kshirsagar, CEO of Taxpayers Australia Ltd.

The minimum drawdown levels increase from 4% a year before age 65 to 14% for those aged 95 or more.

“With small returns from less risky investments — that is, cash, term deposits and fixed interest, there isn’t enough income to fund these drawdowns,” said Kshirsagar.

He said that these “eroding” drawdown levels may force older Australians to relying on the Age Pension in their 80s and 90s.

Taxpayers Australia is calling on the Government to reinstate the pension drawdown relief.

“During the global financial crisis, from 2008 to 2011, the government reduced the pension drawdown percentage to half the current day amounts,” Kshirsagar said.

Between 2008/09 and 2010/11 account based pension drawdown rates were halved, between 2011/12 and 2012/13 there was a 25% reduction in the minimum drawdowns.

“With the official interest rate remaining at an all-time low, the time to act is now!”

The Government has been conducting a review of retirement income streams. It has been reported that the outcome of this review will be announced soon.

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