Superannuation rule change a win for self-funded retirees

The federal government is shoring up the vote of self-funded retirees by promising these changes to superannuation if it wins the election.

The federal government has looked to shore up the vote of self-funded retirees, extending a break on compulsory drawdowns and promising no new taxes on superannuation.

Super rules require people to take a certain percentage of the money in their super in the form of a tax-free pension, a percentage that rises as they get older.

Rules introduced at the start of the pandemic cut the amount of money they have to take out of super as pensions.

Before the Covid-19 pandemic, a self-funded retiree aged between 80 and 84 was required to take 7 per cent of their fund as a pension.

Treasurer Josh Frydenberg. Picture: Gary Ramage.

Since the changes they have only needed to withdraw 3.5 per cent.

The pandemic measure — known as the Temporary Minimum Drawdown Reduction — was due to expire at the end of June, but Tuesday’s budget will extend it until July 2023.

The move comes as the Coalition also promised that if it is re-elected there will be no increased taxes on superannuation.

Treasurer Josh Frydenberg said the Morrison Government was sending a message that people’s super was safe with them.

“We recognise the valuable contribution self-funded retirees make to the Australian economy and the sacrifices they made to provide for their retirement,” he said.

“That’s why, as part of our plan for a stronger future, the Government is extending the 50 per cent reduction in minimum drawdown requirements until 30 June 2023.”

He said the Government would go to this year’s election, again promising there would be no tax increases on superannuation.

“At the last election, we promised there would be no new taxes on superannuation. Over the last three years we have honoured that commitment,” he said.

“At this election, we are again saying to retirees – under a Morrison Government there will be no increased superannuation taxes.”

Mr Frydenberg said this was a promise that Labor could not match.

“Labor sees success as something to be taxed, not celebrated,” he said.

“At the last election, Labor promised $387 billion in higher taxes including on retirees and their superannuation. That’s why they can’t be trusted by retirees to not increase taxes on their hard earned savings.”

Originally published as Superannuation rule change a win for self-funded retirees