New Pension Rules?

The Report of the Harmer Review (a review into the adequacy of government pensions and the current pension age) is due to be released in late February 2009.  The Henry Tax Review report into retirement incomes is due to be released in March 2009.

The two reviews may trigger a significant change in the current treatment of retirement incomes – whether self funded or government-funded.

While we are not privy to the deliberations of either Review, hopefully, they will propose relaxation of the contribution restrictions which apply for super investors aged 65 to 75, and will modify the requirement that account-based pensions pay a minimum pension amount in respect of each financial year.

Relaxation of the contribution rules may permit self-funded retirees to make further super contributions to repair the balance sheet of their pensions.

Relaxation of the minimum payment rule for account-based pensions may permit self-funded retirees the ability to reduce the rate at which pension capital is drawn down thereby preserving pension capital.