There are a number of measures in place designed to support pensioners and retirees through the COVID-19 crisis.
On top of the deeming rate changes made at the time of the first package, the Government will reduce the deeming rates by a further 0.25% to reflect the latest rate reductions by the RBA. As of 1 May 2020, the lower deeming rate will be 0.25% and the upper deeming rate will be 2.25%.
The minimum annual payment for account-based and similar pensions is calculated as a percentage of the account balance as at 1 July each year. The government has announced that the minimum annual payment will be reduced by 50% for 2019-20 and 2020-21. This measure will benefit retirees by providing them with more flexibility as to how they manage their superannuation assets. If you have sufficient cash resources this would mean that fewer assets would need to be sold in your superannuation account now during this time of stock market volatility. Please make sure you contact your financial adviser if you have questions about this option.
In addition to the $750 stimulus payment for pensioners announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.
This second $750 payment will be made automatically from 13 July 2020 to around 5 million income support recipients and eligible concession card holders. Around half of those that benefit are pensioners. Payment of the first $750 payment commenced on the 31 March 2020 to people who will have been on one of the eligible payments any time between 12 March 2020 and 13 April 2020.
If you are over Age Pension age and have not been eligible for a Pension due to your asset value being too high, with the current market correction you may find you are eligible to apply for a Part Pension. This may also entitle you to other Government Payments announced in the Stimulus. Please contact your financial adviser to discuss your circumstances.
Market volatility is nothing new and the temptation to sell out during significant market corrections is always there. Each person’s circumstances will be unique so if you have questions regarding what action you should or shouldn’t take regarding your investment portfolio, this is definitely a conversation to have with your adviser. However, it is our overall investment philosophy that during times of volatility it’s more important than ever to refer to your investment strategy and your stick with your plan. You can read more on this in our Investment Outlook section.