Mar 2022 2 Minutes
Superannuation Related Measures
Article part of 2022-23 Federal Budget update
The Government does not appear to have any appetite to tinker with Superannuation so close to an election. There were however a couple of items of note.
Reduction in minimum pension drawdowns extended to 2022-23
In 2020 at the start of the COVID 19 Pandemic the Government introduced a measure to reduce the minimum required drawdown rate for Account Based Pension, Allocated Pensions and market-linked pensions by 50%. This measure was initially due to expire at the end of the 2021 financial year. In last year’s Budget this measure was extended for a further 12 months. The Government has in this Budget extended this by a further 12 months and it is now due to expire 30 June 2023.
Regular drawdown rates and reduced drawdown rates are as follows:
This measure will be welcomed by older members who may not require the larger required drawdowns to fund their living and lifestyle expenses and will allow their superannuation balances to remain higher than they otherwise would be.
Whilst this will provide for tax savings each year by the earnings on the assets remaining in the concessionally taxed environment, members need to keep in mind that this may impact any lump sum tax should their entitlements be paid to non-tax dependents.
Superannuation Guarantee Increase left unchanged
The Superannuation Guarantee rate is legislated to increase to 12% from 1 July 2025 with stepped annual increases of 0.5% on the current rate until the 12% rate is reached. The current rate of 10% is therefore legislated to increase to 10.5% from 1 July 2022. There was speculation that the Government may freeze these increases in the hopes of increasing current day worker earnings. This Budget however, does not change this and the Superannuation Guarantee Rate will continue to increase over the coming years as per the below table.