Business advice
and accounting

Our purpose is to help you on your journey as you grow. Learn more about our history, partners and purpose.

Our purpose is to help you on your journey as you grow. Learn more about our history, partners and purpose.

Your partners for Business Service and Advisory, Taxation, Audit, Fraud and Risk.

Whatever your business, industry or family office, from local or international institutions we bring extensive expertise.

We're one team with a purpose and passion for what we do. Learn about our culture and career opportunities available to you.

Uncovering insights, trends and inspiration to help business grow in an ever-changing world.

We are always looking for ways to engage and give back to our community.

Telephone: +612 9283 1666
Email: admin@esvgroup.com.au

Level 13, 68 York Street,
Sydney NSW 2000

Why us

Our purpose is to help you on your journey as you grow. Learn more about our history, partners and purpose.

What we do

Your partners for Business Service and Advisory, Taxation, Audit, Fraud and Risk.

Who do we help

Whatever your business, industry or family office, from local or international institutions we bring extensive expertise.

Work with us

We're one team with a purpose and passion for what we do. Learn about our culture and career opportunities available to you.

What we think

Uncovering insights, trends and inspiration to help business grow in an ever-changing world.

Working to give back

We are always looking for ways to engage and give back to our community.

Contact us

Telephone: +612 9283 1666
Email: admin@esvgroup.com.au

Level 13, 68 York Street,
Sydney NSW 2000

24 October 2023

by Paul Schipelliti

Minimum withdrawals double

Since 1 July 2023, the temporarily reduced superannuation minimum drawdown requirements for account-based pensions have doubled to pre-pandemic withdrawal rates. The 50% reduction was introduced by the government as an interim measure in response to the impact the pandemic had on member superannuation balances.

The minimum drawdown requirements apply to:

  • Account-Based Pensions
  • Transition to Retirement Pensions (a 10% maximum also applies)
  • Term-Allocated Pensions

What is a pension payment?

Pension payments must be paid out of the superannuation fund in cash only.

Whilst members with a Transition to Retirement Income Stream (TRIS) or Account-Based Pension can take a lump sum commutation of their pension as an in-specie payment if the tax components include a component of unpreserved money – minimum pension payments required for a financial year cannot be satisfied by in-specie withdrawals.

See below the minimum percentage of account balances required to be withdrawn by age:

Age Under 65 65-74 75-79 80-84 85-89 90-94 95 or more
2023-24 Income Year 4.0% 5.0% 6.0% 7.0% 9.0% 11.0% 14.0%

Potential Liquidity Challenges

The majority of superannuation funds have increased in value post pandemic off the back of strong growth in asset prices – such as equities and direct property.

Liquidity challenges from a withdrawal perspective can often exist for those members, whose investment strategies are skewed towards asset classes such as property or unlisted shares or units.

As minimum pension payments are based on a percentage factor and the member’s pension balance, depending on the income stream generated by assets within the superfund, this may cause liquidity issues for members particularly when members have capital invested in illiquid assets or assets that have irregular income patterns.

Put simply, this may put members in a position where they are required to sell off assets if the superannuation fund does not have enough cash to support the minimum pension withdrawal for the financial year.

Be prepared – where do I start?

The minimum drawdown rates took effect from 1 July 2023. For those members of a superannuation fund that have capital tied up in lumpy assets such as property or unlisted investments – we recommend that you seek advice from your Engagement Partner to assist with determining the potential tax outcomes associated with the possible sale of assets (if required) to assist in meeting the increased minimum drawdown for the 2024 financial year.

Should you have any questions about how these changes will impact you please reach out to your Engagement Partner. As always, we are here to help and explain what the changes mean for our clients.