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HomeSMSF NewsGovernment support for retirees to manage market volatility in 2020

Government support for retirees to manage market volatility in 2020

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.

Summary

Government fact sheet for retirees 2020

Download the 2-page government fact sheet by clicking the image above.

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.

Download the complete Australian Government fact sheet by clicking here.

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Diana Morris founded The SMSF Accountant in 2010. Diana is a member of both CPA Australia and Chartered Accountants Australia and New Zealand and an affiliate of The Tax Institute. She holds a current public practice certificate, and is a registered tax agent. Diana has completed a Bachelor of Commerce degree and a Graduate Diploma of Chartered Accounting.