Australian Age Pension
Minimum drawdown requirements
As part of its response to the economic impact of the coronavirus, the Government has announced a temporary reduction on the required drawdown rates from superannuation income streams. The reduction applies for the 2019/20 and 2020/21 financial years.
Default minimum drawdown rates (% of member balance)
Reduced rates for FY 2019/20 & FY 2020/21
|95 or more||14||7|
On 12 March 2020, the Government announced there would be a 0.5 percentage point reduction to the upper and lower social security deeming rates. A further rate reduction has since been announced, which will see rates drop on 1 May 2020 to:
|Upper deeming rate||2.25%|
|Lower deeming rate||0.25%|
Pension assets test changes 2018
The assets test is used to work out two things:
a) Your eligibility for the Government Age Pension, and
b) If you are eligible, how much Age Pension you can receive each fortnight.
Only those people who have assets with a total value less than a certain threshold, are able to receive the full pension.
If the total value of your assets is above the threshold, then the amount of Age Pension you’ll be entitled to will decrease.
On 1 July 2018, the assets threshold increased. The new assets threshold is in addition to the value of your home.
|Homeowner||Not a homeowner|
If the value of your assets is less than the threshold for your particular circumstances, you may receive the full Age Pension (depending on your income).
If you are eligible to receive the Age Pension and the total value of your assets is above the threshold, then the amount of Age Pension you receive will decrease faster than it currently does.
The pension taper rate increased from $1.50 to $3. This means for every $1000 of assets beyond the assets free area ($258,500 for a single homeowner and $387,500 for a home-owning couple) the pension is reduced by $3 per fortnight, or $78 per year.
Examples of assessable assets include household contents, personal effects, cars, boats, caravans, investments and real estate. The family home is excluded from the Age Pension assets test.
What can you do to retain your pension?
Not everything you own is actually counted towards your assets for the purposes of the test – for example, your family home is not included in your total assets. See the info box below, for more details.
Since everyone’s financial position and asset portfolio is different, it is important to get professional advice from a financial planner with expertise in retirement income.
If you’re a member of an Industry SuperFund, then you can call your fund and ask to speak to one of their specialist financial advisors.