Account-based pensions will be recalculated during the first week of July. Please review your clients’ pension indexation settings before 1 July 2019.

Calculating minimum pension payments

All pension accounts opened before 1 June 2019 must take a minimum pension calculated using the minimum percentage factor relating to their age.

The minimum pension is calculated by multiplying your client’s pension account balance as at 1 July by their percentage factor as shown below.

Client’s age

Percentage factor (%)

Under 65

4

65 – 74

5

75 – 79

6

80 – 84

7

85 – 89

9

90 – 94

11

95 or older

14


What do you need to do?

1.    Before 1 July

Review your clients' pension details and make any changes online by following Administration > Pension > Amend Annual Pension details before 30 June 2019.

If you’ve set a specific amount for your client to receive please ensure the indexation method is set to ‘None’, otherwise this will be reset based on the indexation method selected.

2.    1 July to 6 July

No changes can be made to pension accounts online during the recalculation. Any pension payments, or lump sum payments requests received during this time will be processed after the recalculations have been finalised. 

3.    From 7 July

Any additional changes can be made online from 7 July to 10 July to take effect for a July pension payment. 

Indexation types

Below is a summary of the various indexation types and their effects. 

Indexation type

Effect upon the July pension recalculations

Minimum

The annual pension will be based on the minimum percentage factors

Fixed percentage

The annual pension amount will increase by the fixed percentage previously selected for the account (see note 1)

CPI

The annual pension amount will increase in line with movements in the consumer price index (CPI) (see notes 1 and 2)

None

The annual pension amount will not change (see note 1)

Maximum

Only applies to transition to retirement pensions. The annual pension will change to the recalculated maximum

Standard

Only applies to Term Allocated Pensions. Recalculations for these accounts will revert to the standard (100%) annual payment amount (see note 3)


Please note:

  1. when the selected indexation method results in a pension below the required minimum annual payment for 2019/20, the pension level will be raised to the minimum to meet legislative requirements

  2. your clients pensions will be adjusted according to the annual rate of increase in the ‘All groups CPI weighted average of eight capital cities’ (March quarter) as published by the Australian Bureau of Statistics

  3. Term Allocated Pension accounts will be recalculated based on the standard (100%) annual payment amount (ie without taking into account the ability of clients to vary payments to between 90% and 110% of this amount).

  4. The gross payment amount may change for any pension commenced, or any pensions where payments were altered during the current financial year. You will need to review your clients’ pension details, and check that the gross annual amount of your clients’ pension will deliver the required gross payment amount for the frequency you select.