Retirement phase income streams
Minimum income percentage factors, pro-rata rule and '1 June rule'
Minimum income percentage factors
The minimum annual income payment for an account-based pension (including transition to retirement pensions) is calculated as a percentage of the account balance as follows:
Minimum percentage for 2017-18 year
|95 and more||
Pro-rata rule and '1 June rule'
Where an income stream commences part way through the financial year, the minimum income payment is pro-rated based on the days remaining in the year.
Minimum payment = minimum annual payment x remaining number of days in financial year / number of days in financial year
John commences an account based pension on 1 January 2017 at age 67. Initial purchase price is $300,000.
John's minimum annual payment: 5% x $300,000 = $15,000
As John's account based pension commenced part way through the financial year he is subject to a pro-rated annual payment.
Minimum payment = $15,000 x 181/365 = $7,438 (rounded to $7,440)
The '1 June rule' may also apply, which means that no payments are required to be made until the following financial year for an account-based pension or annuity commenced after 1 June in a financial year.
Last modified: Thursday, August 24, 2017