The Government is helping retirees to manage the impact of volatility in financial markets on their retirement savings by temporarily reducing superannuation minimum drawdown requirements. The Government is also reducing social security deeming rates in recognition of the impact of the low interest rates on savings.
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 percent for the 2019-20 and 2020-21 income years.
The Government is also reducing both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.
Temporary reduction in superannuation minimum drawdown requirements
This measure will benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.
The reduction applies for the 2019-20 and 2020-21 income years.
Changes to social security deeming rates
As of 1 May 2020, the upper deeming rate will be 2.25 percent and the lower deeming rate will be 0.25 percent. The reductions reflect the low interest rate environment and its impact on the income from savings. The change will benefit around 900,000 income support recipients, including around 565,000 people on the Age Pension who will, on average, receive around $105 more from the Age Pension in the first full year that the reduced rates apply.
The changes will be effective from 1 May 2020. This measure is expected to have a cost of $876 million over the forward estimates.