If a pension does not meet the minimum drawdown requirements, then one loses the current pension income exemption from the beginning of the financial year. Consequently, despite the revised minimum pension drawdown amounts announced in response to the Covid-19 crisis, it is important to check this for each pension in the next couple of weeks.
To assist with the calculations, the "Actuarial Services” tab of the NetActuary website has both ABP and Market-Linked Pension minimum drawdown calculators. These have been updated for the Covid-19 reductions.
Some clients may still be relying upon a legacy pension to provide asset test exempt advantages and (hence) a higher Centrelink Age Pension. Reduced 30th June, 2020 market value could see adequacy requirements not being met and therefore the loss of this status. The lifetime legacy pension reserve calculator has been updated for the latest mortality tables and reduced cash returns. NetActuary has a service focus on these legacy pensions and our $220 inclusive of GST fee must be the lowest in Australia!
The data requirements are simple – the last actuarial report and draft accounts. However, before the end of the year, if you let me have some information, I will check them for you for no cost. The time to the year end is short – but it may be in the client’s interest to take steps with reserves and crediting rates.
Hopefully the ECPI red-tape simplification will go ahead from 1st July, 2020. If you want to be certain to use the unsegregated method for the full 2020-21 financial year, consider leaving $10 in an accumulation account.
Actuarial certificates and reports have again become a core area for NetActuary. We have no wish to regain the title of largest supplier. Our aim is to be the most useful actuarial support supplier to use.
Do feel welcome to give Brian a call on (03) 9028 5002 for a chat about how we can help you and your firm.
Brian Bendzulla