The Federal Government’s decision to extend the temporary reduction in superannuation pension drawdown rates has been welcomed by the SMSF Association.
Announced as part of a 2022-23 Federal Budget that saw few changes to the superannuation system, SMSF Association CEO John Maroney says: “The temporary reduction in the minimum drawdown rates will help retirees manage the impact of volatility in financial markets.
“The reduction is designed to reduce instances where retirees may have to sell some superannuation investments in a volatile or depressed investment market simply to satisfy the Government’s minimum pension drawdown requirements, so, in the current geopolitical and COVID climates, extending the cut in drawdown rates is an important initiative that will help many retirees.”
Another positive emanating from the Budget that will benefit the SMSF sector is the Government’s decision to proceed with regulations that will allow commutations to be made from certain non-commutable pensions to resolve excess transfer balance amounts.
“We have been strong advocates of this reform so it is pleasing that the Government has decided to move forward with a reform that will be important to some retirees.”
He says the proposed expansion of access to employee share schemes underlines the need for the SMSF industry to have certainty about how the non-arm’s length expenditure rules (NALE) operate, particularly in relation to how discounts are treated for non-arm’s length income (NALI) purposes.
Maroney concludes: “This Budget includes stability of superannuation tax and contribution rules compared with the significant and important reforms to superannuation in last year’s Budget. This simple fact that there were no wholesale changes to the superannuation system is gratifying for an industry that needs a period of stability.”
SMSF Association Members can read a full Budget Summary here.