Q: I wondered if a SMSF pension that was started at the relief rate of 3%, would it then have to increase to the 4% once the relief period expired, or would it remain at 3% because it was started at that rate?
The temporary pension payment relief (75% of the usual minimum pension payments) applicable for account-based pensions, and other eligible pensions is just that – temporary, for the 2012/2013 year. Based on the contents of your question, if your minimum pension payments were 4% and then reduced to 3% under the pension payment relief, then you must be aged 64 or under (see table below).
The government has not yet announced an extension (if any) to the temporary relief for future financial years, which means the annual minimum pension payments required are likely to revert to normal from July 2013. The minimum pension factors for the 2012/2013 year, and the regular pension factors, are set out in the table below. For more information on how you calculate your minimum pension payments see the following SuperGuide articles:
- Retirement and tax: What are the minimum pension payment rules?
- What a relief! Minimum pension payments reduced by 25% for 2011/2012 and 2012/2013 years
- SMSF pension: How do I calculate my minimum pension payment?
Minimum annual pension payments (for account-based pensions)
|Regular Percentage factors||Temporary relief available|
|2011/2012 and 2012/13 years (25% relief)||2010/2011 year (50% relief)|
|95 or older||14%||10.5%||7%|
Note: Amount calculated on 1 July each year, unless first year of account-based income stream, and then pro-rated from commencement day. Minimum amount to be rounded to nearest $10.
Source: Adapted from Schedule 7, Superannuation Industry (Supervision) Regulations 1994 and Federal Government news releases dated 18 February 2009, and 12 May 2009, and 30 June 2010, and 29 November 2011. Figures for 2011/2012 year and 2012/2013 year calculated by Trish Power.
Background: If you have an account-based pension (or the older-style allocated pension) you must pay a minimum amount at least annually. If you’re aged 65 to 74, the usual minimum pension payment for an account-based pension is 5% of your pension’s account balance. Under the temporary relief, you are required to withdraw a minimum of 3.75% of your account balance as at 1 July 2011 (for the 2011/2012 year), or as at 1 July 2012 (for the 2012/2013 year). For example, Robert is 68 and has $500,000 in his pension account. His minimum pension payment is $25,000 under the regular pension payment rules, but under the temporary relief his minimum payment is $18,750.