Superannuation - RBL's

Taking Money out of Superannuation - RBL's

When the time comes to withdraw money from superannuation, Reasonable Benefit Limits (RBL's) as mentioned previously, limited the amount that could be withdrawn on a concessionally taxed basis; amounts over the RBL's attracted tax at the highest marginal rate plus medicare levy. However, as we indicated in our Introduction to Superannuation, the Australian Government announced in the 2006 Budget that RBL's would be abolished with effect from July 1, 2007.

This measure, in concert with a number of other changes, dramatically simplifies retirement planning for a large number of Australians and expatriates. For background purposes we retain are discussion of RBL's below - and will add to it when the approach to RBL's in the transitional period up until July 1, 2007 becomes clearer.

In this context there were two RBL's. A "lump sum" RBL applied when you took a superannuation benefit in cash - and also applied when you did not qualify for the higher "Pension" RBL. To qualify for the Pension RBL you generally had to take at least half of your total qualifying benefits in the form of a "complying pension" or "ETP (eligible termination payment) annuity".

The 2004/05 figures for the RBL's were:

• Lump Sum RBL:$619,223
• Pension RBL: $1,238,440

The pension RBL was double the lump sum RBL in order to provide individuals with an incentive to take their retirement benefits in the form of an ongoing income stream. Note that some people did qualify for a higher RBL limit than those shown above – they were known as “Transitional RBL’s” and were quite complex, being based on a person’s age and superannuation entitlement as 1 July 1994.

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