COVID relief continues for retirees

The Australian Government has extended measures brought in to help retirees through the COVID-19 crisis.

Lower minimum income rate…

If you hold an account-based pension or similar product, you need to withdraw a certain amount each financial year – this is called your minimum income amount. The Government reduced this amount by 50% during the last year.

The lower rate has now been extended until 30 June 2022 so Australian retirees can continue to receive a lower income if they wish. It minimises the need to sell down assets in markets that remain depressed.

Here are the minimum pension drawdown rates for 2021-22.

Age

Default minimum income (%)

Reduced minimum income for 2021-22 (%)

Under 65

4

2

65-74

5

2.5

75-79

6

3

80-84

7

3.5

85-89

9

4.5

 90-94

 11

 5.5

 95 or more

 14

 7


The lower rates are not compulsory, so you can choose to receive a higher payment if you prefer. But if you’ve chosen to receive the minimum income amount, this will continue to apply. 

It’s a good idea to check your current pension payment arrangement before making any changes. If you’re an AMP client, you can do this by logging into My AMP.

If you’d like to change your pension payment amount, frequency or date, you can:

..and deeming rates

Meanwhile, the Government has retained lower deeming rates for 2021-22, while increasing the asset thresholds at which they apply1. These lower deeming rates were brought in during 2020 to help Australian retirees through the COVID-19 crisis.

Status

Thresholds 2020-21

Thresholds 2021-22

Deeming rates

Single

First $51,800

First $53,600

0.25%

Balance over $51,800

Balance over $53,600

2.25%

In a couple, at least one pension

First $86,200

First $89,000

0.25%

Balance over $86,200

Balance over $89,000

2.25%

In a couple, no pension

First $43,100

First $44,500

0.25%

Balance over $43,100

Balance over $44,500

2.25%

Deeming rates apply as a way to check if you’re eligible for the age pension and other entitlements. Deeming assumes you earn a certain income from your investments, regardless of how much you actually earn. It means any Government payments you receive remain steady, rather than fluctuating depending on how your investments are performing.

Deeming can provide an incentive to invest, as any extra amount you earn above the deeming rate doesn’t count as income.

Next steps

If you’re looking to make the most of your retirement income, here are plenty more tips about how to retire right or call us on Ph: 07 3340 5117.

1.https://www.servicesaustralia.gov.au/individuals/topics/deeming/29656

Source: AMP July 2021


Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling Ph: 07 3340 5117, before deciding what’s right for you.

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