If you have an account-based pension or transition to retirement income stream (TRIS) in Australia, the ATO requires you to withdraw a minimum amount each financial year. These minimum drawdown rates are set as a percentage of your account balance and increase as you age.
The rates below are the normal rates, which have applied since 1 July 2023.
Minimum Drawdown Rates — Current (FY2025–26)
| Age on 1 July | Minimum Annual Drawdown Rate |
|---|---|
| Under 65 | 4% |
| 65 – 74 | 5% |
| 75 – 79 | 6% |
| 80 – 84 | 7% |
| 85 – 89 | 9% |
| 90 – 94 | 11% |
| 95 and over | 14% |
Source: Australian Taxation Office (ATO), Schedule 7 — SIS Regulations
How the Minimum Is Calculated
The minimum drawdown for the year is calculated by multiplying your account balance at 1 July (or at the start of a pension) by the applicable percentage for your age.
Example 1: You are 68 years old on 1 July and your pension account balance at 1 July is $450,000.
- Applicable rate: 5% (age 65–74)
- Minimum annual payment: $450,000 × 5% = $22,500
Example 2: You start a pension on 1 January with a $300,000 balance. You are 72 years old.
- The minimum is proportional to the number of days remaining in the financial year
- Days remaining (1 Jan to 30 Jun): approximately 181 days out of 365
- Minimum: $300,000 × 5% × (181/365) = approximately $7,438
You must withdraw at least the minimum amount for the year. You can withdraw more — there is no maximum for an account-based pension (unlike a TRIS, which has a 10% maximum).
If you do not withdraw the minimum, the pension may be treated as ceasing for tax purposes — potentially affecting the fund’s tax-exempt status on earnings and triggering compliance issues.
Why Minimum Drawdown Rules Exist
The minimum drawdown rules exist to ensure that super savings accumulated with tax concessions are used to fund retirement, not passed on as an inheritance or used as a tax shelter indefinitely.
The government provides super’s tax concessions (0% tax on pension phase earnings, tax-free withdrawals after 60) on the basis that the money is being used for retirement living — not preserved intact for the next generation. The minimum drawdown rules enforce this intent by requiring a progression of withdrawals over time.
The rates increase with age to reflect:
- Shorter remaining life expectancy means more capital must be drawn each year to exhaust the balance over a realistic timeframe
- Older retirees may have less need (or ability) to preserve capital for the long term
Transition to Retirement (TRIS) — Same Minimums, with a Maximum
A Transition to Retirement Income Stream (TRIS) is an income stream available to those who have reached preservation age but have not yet retired. TRISs have the same minimum drawdown rates as account-based pensions — but also have a maximum of 10% of the opening balance each year.
Once the member retires (or turns 65), the TRIS can convert to a regular account-based pension and the 10% maximum no longer applies.
What Happens If You Don’t Draw the Minimum?
If you fail to withdraw at least the minimum annual amount, the pension is deemed to have not met the pension standards for that year. Consequences include:
- The fund may lose its 0% tax exemption on earnings for that year
- The trustee (for SMSFs) may face compliance issues
Most super funds automatically ensure the minimum is paid — if you are an SMSF trustee, you must ensure the correct amount is drawn before 30 June.
Exception: In the year the pension is commuted (converted to a lump sum or rolled back to accumulation), the minimum is pro-rated.
Strategies Around Minimum Drawdown
Drawing exactly the minimum: If you don’t need the income, drawing the minimum each year preserves as much capital as possible in the low-tax pension environment.
Drawing more for lifestyle spending: There is no restriction on drawing more than the minimum if you need funds for major expenses, travel, or other purposes.
Keeping a cash buffer: Many financial advisers suggest retirees keep 1–2 years of income in cash within the pension account. This avoids being forced to sell growth assets at depressed prices to meet minimum drawdown requirements during market downturns.
Considering fund income distributions: For SMSFs, some retirees time asset sales and pension payments to coincide with the fund receiving dividends or rent, reducing the need to sell to fund drawdowns.
Frequently Asked Questions
Does the drawdown rate apply to the balance at the start of the year or end of the year? The rate applies to the balance at 1 July of the financial year (or at the date you start the pension, for pensions starting mid-year). Market movements during the year do not change the minimum already set.
I’m 64 — so my minimum is 4%. What happens when I turn 65 in March? Your age for the minimum drawdown purposes is your age at 1 July — the start of the financial year. If you are 64 on 1 July, the 4% rate applies for that entire financial year, even if you turn 65 in March. The 5% rate would apply from the following 1 July when you are already 65.
Can I skip the minimum drawdown in a year where my fund has performed poorly? The normal answer is no — the minimum must still be paid. The government previously allowed reduced minimums during the COVID-19 pandemic (2019–20 through 2022–23), but those temporary reductions are no longer in effect. Normal rates apply from 1 July 2023 onwards.
My account-based pension is running low — do I have to draw 14% even if it means it runs out soon? Yes — the minimum applies regardless of the balance level. At very small balances (e.g. $10,000 in the 95+ bracket), the required 14% drawdown is $1,400. The fund can continue until it reaches zero, at which point the pension ceases.
See also: Retirement Income. For further guidance, see the ATO’s minimum pension standards. For advice tailored to your situation, speak with a licensed financial adviser through MoneySmart.