As we approach the end of 2015, it is an opportune moment to assess your progress in retirement financial planning and determine if you are on track to fulfil 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 the account balance on 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Since there is no upper limit on how much can be withdrawn from an ABP, there are no issues in wanting to draw more to cover any additional needs.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 of 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 until after 60, it will save you some tax.
*Correct as of December 2015
Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.
