Recent changes to the minimum pension drawdown rules mean the amount of money retirees are required to withdraw from their retirement savings has been temporarily halved.
This change, announced as part of the government’s COVID-19 stimulus package, aims to allow retirees to keep more of their money invested in the market without the need to sell assets, and potentially crystalise losses, to cover cashflow requirements.
As a result, retirees who previously advised their pension product providers to pay the minimum amount may see their payments automatically halved for the 2019/20 and 2020/21 financial years, unless they instruct their product provider otherwise.
Unfortunately, many retirees will be inadvertently disadvantaged as they rely on pension payments to fund their lifestyle.
Following extensive consultation, ClearView will not automatically reduce payments to customers who nominated to receive the minimum pension before the announcement of the government’s COVID measures on 22 March 2020.
Our position recognises that many retirees, particularly those with low pension account balances, will need to withdraw more than the government’s reduced minimum amount to cover their living expenses.
We will be writing to ClearView customers who currently receive the standard minimum to reassure them that their pension payments from ClearView WealthFoundations, ClearView WealthSolutions and ClearView Pension Plan will continue unchanged.
ClearView customers who, prior to 23 March 2020, nominated the minimum pension will continue to receive the standard minimum, unless they request to make a change.
New customers who commenced pensions in ClearView products after 23 March 2020 and those who nominated the minimum pension rate after 23 March 2020 will receive the temporary COVID minimum.
Wealthier retirees who have watched the value of their portfolios recently fall and are financially able to support themselves in the immediate term can of course contact us to reduce their payments if they choose.
For more information, please speak to your BDM.