NEWSFLASH!!! – COVID 19 Special Report
Federal Government, Coronavirus Relief Measures Announced
Early Release of Superannuation & Reduction of Minimum Pension Payments
The Australian Government announced its economic support package to help Australians who are under financial stress as a result of the Chinese Virus (coronavirus or covid-19) and these became law last week!
Two of the support measures passed by the government include the early release of superannuation for those financially affected by the Coronavirus and a temporary reduction of minimum pension payment requirements for retirees.
We’ve summarised these measures below, including information about who is eligible and how individuals can access these provisions. This information is based on what was announced by the Government:
What is the early release measure?
The Government is allowing eligible Australians to apply to withdraw up to:
• $10,000 of their superannuation in financial year 2019-20 (before 1 July 2020), and
• Up to a further $10,000 in financial year 2020-21 (from 1 July until 24 September 2020).
Who is eligible?
To apply for early release of super, members must satisfy any one or more of the following requirements:
• are unemployed; or
• are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
• on or after 1 January 2020:
-
- were made redundant; or
- working hours were reduced by 20% or more; or
- are a sole trader, their business was suspended or there was a reduction in turnover of 20% or more.
When can you apply?
Members can apply for early access to their super through MyGov from Monday 20 April.
How do you apply?
• You can register your interest with the ATO now by logging in to their myGov account and following the ‘Intention to access coronavirus support’ instructions.
• The ATO will then notify you by email or SMS when applications for early access open.
• If you don’t already have a myGov account, you can set one up by selecting ‘Create an account’.
Where can you find more information?
Via the ATO website.
These payments are tax-free and will not affect any Centrelink or Veterans’ Affairs payments. Members will be required apply directly to the ATO, rather than through their super fund.
Reducing minimum pension payments
What is the new measure?
The Government has announced it is reducing the minimum pension payment requirement for account based pensions and similar products by 50% in both 2019-20 and 2020-21 financial years.
When are the new minimums?
The amount by which members can reduce their pension payment will depend on their age:
| Age | Minimum annual pension payment | NEW* optional minimum annual pension payment for 2019-20 and 2020-21 |
| Under 65 | 4% | 2% |
| 65-74 | 5% | 2.5% |
| 75-79 | 6% | 3% |
| 80-84 | 7% | 3.5% |
| 85-89 | 9% | 4.5% |
| 90-94 | 11% | 5.5% |
| 95+ | 14% | 7% |
*Note: Members can still choose to take above the minimum.
Other things to be aware of:
• Minimum percentages are calculated on account balance at commencement of the pension date and at the start of each subsequent financial year.
• Pension payment amounts for the current financial year (2019/20) will remain the same unless members requests to change it.
From when can members reduce their pension payment for 2019/2020?
Members can request to reduce their pension payments at any time.
Where can I find more information?
You can read more in this Government factsheet.
Reduced deeming rates
What is the new measure?
• The Government is reducing the deeming rates by a further 0.25 percentage points on top of the already announced 0.5% reduction to reflect the latest cash rate reductions by the RBA.
• As a result, the lower deeming rate will be 0.25% and the upper deeming rate will be 2.25%.
• The Government will automatically apply the lower rates from 1 May 2020, with any increased Age Pension entitlements paid from that date.
Where can I find more information?
You can read more in this Government factsheet.
Be aware of scams involving Coronavirus
Visit the Stay Smart Online website for information about Coronavirus scams and how to stay safe. If you you have been scammed, you can make a report on the Scamwatch website, and find more information about where to get help.
Support & Advice
We’re experiencing higher than usual call volumes from our clients. We apologise for any inconvenience this may cause. If you need to speak with us, we will do our best to get back to you in a timely manner.
We are in due course contacting all superannuation fund members and trustees to provide a summary of the key information relating to their super and pension and to outline how we are helping to support clients and their families during these unprecedented and unsettling times.
Lastly, and importantly, we sincerely hope that you, your family, friends and colleagues are healthy and safe during this challenging time.
If you would like to discuss any of the issues raised in this report, please don’t hesitate to contact me directly.
Kind regards,
Justin Mulcahy
Co-Founder & CEO
Certified Financial Planner ®
INTRINSIC ASSET MANAGEMENT
Intrinsic Private Wealth specialise in providing financial advice to Australian investors. With over 20 years of experience in the finance & investment industry.
General Advice Disclaimer: Information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs. Intrinsic Private Wealth has financial advisers that are authorised to provide personal financial advice. Call 02 9615 4500 for more information on our available services.