As a result of the global financial crisis, many self-funded retirees have been particularly affected by falling superannuation values.
Those Australian seniors who derive their income from account-based (superannuation) pensions have seen the value of their pension funds fall by forty or fifty per cent over the last six months. The rules around these pensions however require people to draw a minimum annual amount, determined by the previous year’s fund value as of July 30. Because fund values were at their peak in July 2008 and have since nearly halved, many self-funded retirees have been forced to keep drawing higher pension payments, effectively eating into their capital at an alarming rate.
On February 18, the Federal Government announced a 50% reduction in minimum drawdown limits for account-based and market-linked pensions for the remainder of the 2008/9 tax year. This should provide welcome relief for many self-funded retirees.