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Pension payments – am I taking enough? Can I withdraw more?

Pension payments – am I taking enough? Can I withdraw more?

Current as of December 2015

 

As we approach the end of 2015, it is a good time to check whether you are on track to meet your pension obligations for the 2015/16 financial year.

Account Based Pensions (ABP) – Minimum annual payment percentages

ABPs have a minimum pension payment which must be paid each year and care must be taken to ensure this is met before the end of each financial year to ensure the pension remains concessionally taxed.

Age Percentage of account balance at 1 July 2015
Under 65 4%
65 74 5%
75 – 79 6%
80 – 84 7%
85 – 89 9%
90 – 94 11%
95 or more 14%

 

Since there is no upper limit on how much can be withdrawn from an ABP so there are no issues in wanting to draw more to cover any extra needs.

How about Transition to Retirement Pensions (TTRs) – what is the difference?

For TTRs, the minimum pension percentage remains the same as the above ABP percentages. However there is a maximum payment percentage of 10%. That means you cannot withdraw more than 10% of your TTR balance as at 1 July 2015 during the 2016 financial year.

TIP – pension payments after age 60 are tax free!

Whether you are taking a TTR or ABP from your self managed fund, any pension payments taken after you are age 60 are entirely tax-free. So if you can hold-off taking that next pension payment till after you are 60 it will save you some tax.

 

DISCLAIMER
This newsletter has been produced by Stanley & Williamson as a service to its clients and associates. The information contained in the newsletter is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this newsletter, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under Professional Standards legislation. 

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