In search of certainty
Should the federal government be telling retirees how to invest their super and spend their savings? Its Retirement Income Review noted with concern that retirees are being too parsimonious with their savings and leaving bequests to their kids.
The government wants to ensure super’s generous tax concessions aren’t being used for estate planning, but rather for their intended purpose: providing income in retirement.
As the super system matures and shifts its focus from the accumulation phase to pension phase, the spotlight has focused sharply on which types of products serve retirees best and whether longevity products should play a greater role.
The idea is to put a stop to “leakage” in the $3 trillion system, with some players calling for super fund members to be defaulted into lifetime annuity type products.
But research undertaken by the Association of Superannuation Funds of Australia (ASFA), using data from the tax office, the Australian Prudential Regulation Authority and other sources, found the vast majority of retirees exhaust their savings and leave no super behind when they die.
“We don’t have a systemic problem with retirees underspending or bequeathing their super – quite the opposite. The majority of Australian retirees run out of super well before the end of their lives,”
