Drawdowns and deeming - now they must be fixed

The $1.6 million super cap will not help already challenging deeming and minimum withdrawal rules.

Summary: The proposed $1.6 million limit on tax-free superannuation accounts in pension mode should make the government think about modifying minimum withdrawals from super accounts, as the limit will already create a disincentive to use super as a wealth accumulation vehicle. Deeming rates should also be reviewed in the current low interest environment, as the income that is ‘deemed’ to be generated from many cash investments might be higher than the reality.

Key take out: In this environment of low share market returns and a low cash rate, reviewing the deeming rules and minimum withdrawal requirements would be more fair to superannuation accountholders.

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