POWERED BY MOMENTUM MEDIA
Australian retirees defy profligate stereotype
The vast majority of Australian retirees are frugal and not the profligate double-dippers which some people have suggested, according to actuarial research house, Rice Warner.
In a recently-published analysis, Rice Warner has confirmed that the days of retirees taking and squandering lump sums are long gone, with most retirees taking an income stream and almost inevitably drawing down close to the minimum amount.
“The fact is that around 85 per cent of retirement benefits are taken as retirement income streams, mostly in account-based pensions,” the analysis said. “A large portion of lump sum benefits taken are used for savings not consumption by paying down debt or reinvesting into term deposits.”
“In fact, we have the reverse problem as many retirees are frugal with their pension payments. They are conservative in their drawdowns as they don’t participate in any form of mortality pooling and don’t want to spend their pensions too quickly and run out before they die.”
The Rice Warner analysis said that the Federal Government believed Comprehensive Income Products in Retirement (CIPRs) would address this by allowing people to increase their consumption in retirement by as much as 15 per cent and this had been promoted as a desirable outcome as more of the benefit would be used for retirement and much smaller amounts left as bequests.
The actuarial consultancy flagged that it would be shortly be releasing a report modelling the growth in draw-downs over a 15-year period and how this impacted industry cashflow.
It said the aggregate rate of drawdown was between seven and high per cent, which was only marginally higher than the expected minimum drawdown.
“Based on member demographics, the average minimum drawdown would be close to five per cent of account balance,” the analysis said.
AUTHOR
Mike Taylor
Recommended for you
Governor Michele Bullock took a more hawkish stance on Tuesday, raising concerns over Donald Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
