David French | 24/03/2009 11:11:17 AM

This article was published in Capricorn Investment Partners Limited First Quarter Newsletter 2009

On the 18th of February, 2009 the government announced the suspension of the minimum account-based pension draw down requirements.

Under the existing system, income streams drawn from account-based pensions were required to be at or above a minimum amount, calculated as a percentage of the assets funding the pension stream. For example, if you were 65 years old and had $100,000 in your superannuation account paying you an annual pension, you would be required to withdraw at least 5% of the balance (i.e. $5,000) as an annual pension.

The percentage draw down is calculated on an age-based sliding scale, structured to ensure that retirees draw down their superannuation capital during retirement, rather than rely on the age Pension and other government benefits.

The government has recognised that this requirement placed a significant burden on some self-funded retirees as fund balances have fallen.

In some instances retirees were compelled to sell assets to meet their annual minimum draw down which was calculated on asset balances as at 30 June 2008.

If you are interested in reducing your monthly draw down for the remainder of the financial year, please contact CIPL on 07 4920 4600 to make the necessary arrangements.

The Investment Collective (AFSL 471728) is a non-aligned financial planning and investment firm specialising in providing tailored financial and investment advice for individuals and small business. Capricorn Investment Partners Limited's services include financial planning, share trading, portfolio management, insurance broking and self managed super fund administration. Additional information on services provided by The Investment Collective Limited can be found by following this link. Readers are reminded that this document has been prepared for general information purposes only, and any advice contained herein has been prepared without taking into account your financial objectives, situation or needs. Readers are advised to see their financial advisor prior to acting on any general advice.

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