SuperConcepts technical specialist Anthony Cullen said the reduction in minimum annual payments applies to any pensions with an account-based type of calculation which include account-based pensions, market-linked pensions and allocated pensions.

Mr Cullen said, normally, market-linked pensions are calculated using a formula which determines the standard amount that needs to be taken out and the recipient is allowed to take either 10 per cent above or 10 per cent below that standard amount.

With the reduction in the minimum pension amounts, this means that only 45 per cent of the standard amount needs to be taken out, Mr Cullen explained. 

“This is the equivalent of half of 90 per cent, which is the normal lower amount that needs to be taken out,” he said. 

For clients with these pensions who normally receive pension payments above $100,000, the reduction in pension minimums may present an opportunity to save on tax, he stated.

“Since 1 July 2017, if you’ve got a market-linked pension that existed prior to that date, they are now captured under what we now know as capped defined benefit income streams. You may need to receive a payment summary and if you’re receiving payments in excess of $100,000, then you are potentially going to be paying tax on 50 per cent of that excess above $100,000,” Mr Cullen said. 

“With the reduction in the amount that we need to take, we may find clients that are now getting themselves below that $100,000 figure and potentially saving tax for the next couple of years.”