The Federal Government over the weekend advised it is introducing changes to the superannuation system to provide temporary relief for individuals to deal with the effect of COVID 19.
Temporary Early Release of Superannuation
Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020.
They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months (exact timing will depend on the passage of the relevant legislation).
In order to be eligible, you must satisfy any one or more of the following requirements:
- you are unemployed;
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance;
- On or after 1 January 2020: you were made redundant; or your working hours were reduced by 20 per cent or more; or
- If you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
Support for Retirees – Reduction in Drawdown Requirements
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 income years.
This measure will benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.
The reduction applies for the 2019-20 and 2020-21 income years as follows:
Changes to Social Security Deeming Rates
As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent. The reductions reflect the low interest rate environment and its impact on the income from savings.
The change will benefit around 900,000 income support recipients, including around 565,000 people on the Age Pension who will, on average, receive around $105 more from the Age Pension in the first full year that the reduced rates apply.
If you want to know more about these changes impact you, please contact Brad Ryan on 0421 368 021.