50% Minimum Pension Relief Continues for 2010/11

The Federal Government has announced that the 50% minimum pension relief which has applied for the last two financial years will now apply for 2010/11.

Essentially this means that super investors, who are in pension phase and who are under age 65 at 1 July 2010, will have a minimum pension limit of 2% of their pension account balance.  Without the relief, the minimum pension limit of 4% of their pension account balance would have applied.

For super investors who are 65 or more at 1 July 2010, and who are in pension phase, the minimum pension limits for 2010/11 will be :

• 2.5%  - normally the limit would be 5% if the super investor is aged 65 or more but less than 75
• 3.0% - normally the limit would be 6% if the super investor is aged 75 or more but less than 80
• 3.5% - normally the limit would be 7% if the super investor is aged 80 or more but less than 85
• 4.5% - normally the limit would be 9% if the super investors is aged 86 or more but less than 90
• 5.5% - normally the limit would be 11% if the super investor is aged 90 or more but less than 95; and
• 7.0% - normally the limit would be 14% if the super investor is aged 95 or more.

These reductions also apply to transition to retirement pensions.  However, the 10% pension ceiling continues to apply to transition to retirement pensions.

A similar relief also applies to market linked pensions (also called term allocated pensions).

The relief does not apply to defined benefit pensions.