Minimum Pension Drawdown

The minimum pension drawdown is the amount you must withdraw from your pension each year once you retire. It’s based on your age and helps ensure you’re drawing down enough from your super while in retirement.

What’s the Minimum Pension Drawdown?

When you start an account-based pension or transition-to-retirement pension, you must take out at least the minimum drawdown each year. The amount you need to withdraw is based on your age, with specific rates set for different age groups.

Pension Drawdown Rates for 2024

Here’s how much you’ll need to withdraw, based on your age:

-          Under 65: 4%

-          65 - 74: 5%

-          75 - 79: 6%

-          80 - 84: 7%

-          85 - 89: 9%

-          90 - 94: 11%

-          95 and above: 14%

For example, if you’re 67 with a pension balance of $500,000, you’d need to withdraw 5% of that, which is $25,000 for the year.

Pension Drawdown Rules

There are both minimum and maximum limits for your pension withdrawals each year:

• Transition to Retirement (TTR): You must withdraw between 4% and 10% each year.

  
  

• Account-based pension: Your minimum withdrawal is based on your age, as shown in the table. You can withdraw up to 100% of your balance.

  
  

The pension payments can be received weekly, fortnightly, monthly, quarterly, half-yearly or annually, provided the total combined amount for the total year is at least the minimum calculated amount.

How to Calculate Your Drawdown

To calculate your minimum pension drawdown, simply multiply your pension balance by the rate based on your age.

If you commence the pension part way through the year, you will divide the annual amount by the number of days in the total year (e.g. 365), then multiply by the number of days remaining in the financial year.