Early in 2020, the Government helped retirees to manage the impact of volatility in financial markets on their retirement savings by temporarily reducing the minimum amount that is required to be withdrawn as pension payments each year by 50%. This reduction was expected to finish on 30 June this year, however on 29 May, the Government announced that the 50% reduction would be extended another year to 30 June 2022.
If you have nominated to receive the minimum pension payment, your funf will likely calculate your pension payments for 2021-22 using the reduced minimum percentage factors – unless you provide alternate instructions.
What are the minimum requirements for an allocated pension in the 2021-22 financial year?
Your new minimum pension amount for 2021-22 will be the value of your pension account on 1 July 2021 (measured at the close of 30 June) multiplied by the percentage applicable to your age on 1 July 2021.
This table outlines the temporary minimum percentages that applied in 2020-21 and will now continue to apply in 2021-22.
| Age on 1 July |
2021-22 temporary minimum percentage |
|---|---|
| Under 65 | 2% |
| 65-74 | 2.5% |
| 75-79 | 3% |
| 80-84 | 3.5% |
| 85-89 | 4.5% |
| 90-94 | 5.5& |
| 95+ | 7% |
An example
Alex is age 65 and has an account balance of $100,000 on 1 July 2021 (measured at the close of 30 June 2021). Using the table above, Alex’s minimum percentage for 2021-22 is 2.5%. This means Alex must receive at least $2,500 of pension payments from his pension in 2021-22 ($100,000 x 2.5% = $2,500).