Today I will talk about to issues which are of major importance to retirees. The first concerns the minimum pension payments which must be made each year from the superannuation account in pension mode. The two relevant factors are the balance at June 30 last, and the age of the member. For example, a person aged between 65 and is 74 is required to draw at least 5% of their balance at the end of last June.
This works well in normal circumstances, but retirees don’t want to be forced to cash in valuable superannuation assets during a market downturn. When the GFC hit the government promptly acted to reduce the percentages, and I’m pleased to announce that minimum requirements have just been reduced by 50% in response to a financial crisis that is far worse than the GFC. You can’t do much if you’ve already drawn your minimum pension for the year, but, if possible, you should delay drawings between now and June 30 as long as you satisfy the new minimum limits.
The other major question from age pensioners is whether they can increase their pension if the value of their financial assets drops due to the present market conditions.
Centrelink advise that they automatically revalue market linked managed investments, shares and securities every March and September. Market linked managed investments unit prices are collected at the end of month and ASX listed shares are collected fortnightly. These updated unit and shares prices are used for the processing of new claims and when a customer asks for a revaluation.
You can ask Centrelink to revalue your investments at any time. After they are revalued Centrelink may change your payment rate, meaning you could get a higher payment rate or become eligible for a payment you didn’t receive previously. Just keep in mind that at all investments are revalued at the same time, which could mean no change if some have gone down and some have gone up in value.
The easiest way to update any changes to your income and assets is through your Centrelink online account where you can remove or add managed investments and superannuation and update your shares. If you remove a managed investment from the list will need to state the reason why it has disappeared. Possibly it may simply be a redemption.
The deeming rates are changing from 1 May as well. More on that next week.