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Prior to retirement my wife and I met with a VicSuper representative to discuss our options. Despite the fact that some of the concepts and strategies can appear complex at first, things were explained to us in a way that was really simple and easy to understand, which helped us feel comfortable with the decisions we made.

Ken and Linda
VicSuper members

Minimum drawdown relief

Minimum payment amount - relief for super pension members

The Federal Government has halved the minimum pension payment amounts on account-based pensions and annuities for the 2010/11 financial year. For VicSuper Pension members, this relief will apply to all our pension benefit plans.

This minimum pension payment relief means those with superannuation pensions will not have to take the full minimum payment in the 2010/11 financial year - instead a 50% reduction in the minimum payment amount will apply.

The Government has taken this action in response to the global financial downturn, and in recognition of super fund members being affected by reduced or negative investment returns.

Example 1

Jackie, a VicSuper Commutable Pension member, is age 63.

As at 1 July 2010, she had $300,000 in her account. Normally, she would be required to take 4% of her account balance as pension payments during the 2010/11 financial year, which is $12,000. This is her standard minimum payment amount.

However, under the minimum pension payment relief announced by the Federal Government, she is only required to take 50% of her minimum amount for the 2010/11 financial year - that is, $6,000.

To meet her income needs, Jackie elects to receive a specific pension payment amount of $7,000 for the 2010/11 financial year.

Example 2

Mary has a VicSuper Term Allocated Pension.

Based on her account balance and remaining term at 1 July 2010, Mary's set amount is $10,000 for the 2010/11 financial year. Mary's standard minimum payment is $9,000, which is 10% less than the set amount.

Under the 2010/11 drawdown relief, Mary's minimum is $4,500, which is 45% of the set amount. This means Mary can take anywhere between $4,500 and $11,000, which is 10% greater than the set amount, in the 2010/11 financial year.

Mary elects to receive the drawdown relief minimum payment amount of $4,500 for the 2010/11 financial year.

Will this relief be extended?

At this stage, the Federal Government has advised that the minimum pension payment relief will apply until the end of the 2010/11 financial year; however the Government will continue to monitor this issue. 

Further information

If you would like to discuss your situation, please contact your VicSuper superannuation adviser or call our Member Centre on toll free 1300 366 216.

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