Treasurer Josh Frydenberg will promise older Australians their retirement nest eggs will be protected in the March budget, in a direct pitch to older conservative-leaning voters on the eve of a federal election.
In a pre-budget announcement, Mr Frydenberg said the government will extend a temporary measure that has allowed retirees to withdraw half the normal minimum amount from their superannuation funds.
Treasurer Josh Frydenberg ahead of the next week’s federal budget.Credit:Alex Ellinghausen
It was first introduced two years ago, as financial markets plummeted at the beginning of the pandemic. The announcement means the 50 per cent reduction in minimum drawdown requirements will extend to the end of June next year.
“This will provide retirees with greater flexibility and certainty over their savings,” he said.
“At this election, we are again saying to retirees – under a Morrison government there will be no increased superannuation taxes.”
But the announcement is not a tax break. It means retirees can leave more money in their superannuation accounts without facing tax on what they withdraw.
It also means a retiree aged 81 will only have to withdraw 3.5 per cent of their super balance to qualify for tax concessions.
The halving of minimum superannuation drawdown rules was originally introduced as a temporary support for self-funded retirees in March 2020. It’s the amount a self-funded retiree has to withdraw from their super to qualify for tax-free super. If retirees do not withdraw the minimum, their super payments are subject to tax.
It was introduced in a bid to shelter retirees from large shocks caused by financial market volatility over the course of the pandemic. The federal government said it extended the measure due to ongoing volatility as the pandemic continues and financial markets are affected by the conflict in Ukraine.
In February 2020 the ASX 200 market index peaked at 7139 before falling to 4816 in March. That year, median balanced super funds made 3.7 per cent.
Last year, median balanced super funds made 13.4 per cent. The ASX 200 index is at 7406 and has remained above 7000 for most of February and March.
About 1.8 million superannuation accounts are subject to the minimum drawdown requirement.
Prime Minister Scott Morrison first announced the government would halve the superannuation drawdown in March 2020 as a temporary pandemic measure, to be in effect in the 2019-2020 and 2020-2021 financial years.
In the 2020/2021 budget, the measure was estimated to result in “a small but unquantifiable decrease in receipts over the forward estimates period”.
This year the Treasurer has promised cost of living relief for Australians in the budget, as well as “substantial” investments in infrastructure, skills, defence, and manufacturing.
Most Viewed in Politics
From our partners
Source: Read Full Article