POWERED BY MOMENTUM MEDIA
Breaking the lump sum mythology
The Government would be wrong to predicate Budget superannuation tax changes on the belief that lump sums are a significant factor, according to actuarial consultancy, Rice Warner.
In fact, Rice Warner argues that pensions represent the dominant option for Australians to take their superannuation and this will only increase as pension products improve.
Rice Warner has used its latest bulletin to reiterate the message contained in its pre-Budget submission that a myth has been built around the taking of lump sums.
In fact, the Rice Warner analysis has suggested that by 2025, 96 per cent of all retirement benefits will be taken as a pension.
"The combination of concessional tax treatment, growing average balances and improving pension products will encourage almost all retirees to keep their money in super," the analysis said.
It said the perpetuation of the myth around the taking of lump sums was attributable, in large part, "to how APRA's annual statistics on lump sums were provided in a generalised way (with significant errors on the estimates for the self-managed superannuation fund segment) and then widely misinterpreted by commentators".
"Until recently, the regulator did not give a break-up for lump sums related to retirement and those paid for such reasons as the death and incapacity of members. Yet, several commentators simply took the total of all lump sum withdrawals to be retirement benefits," the Rice Warner analysis said.
It said that in 2014-15, only $18 billion or 58 per cent of the $31 billion paid as superannuation lump sums were related to retirement.
Recommended for you
The super fund announced that Gregory has been appointed to its executive leadership team, taking on the fresh role of chief advice officer.
The deputy governor has warned that, as super funds’ overseas assets grow and liquidity risks rise, they will need to expand their FX hedge books to manage currency exposure effectively.
Super funds have built on early financial year momentum, as growth funds deliver strong results driven by equities and resilient bonds.
The super fund has announced that Mark Rider will step down from his position of chief investment officer (CIO) after deciding to “semi-retire” from full-time work.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
76.97 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
76.46 3 y p.a(%)
3
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
51.13 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
45.15 3 y p.a(%)
5
Select Baker steel Gold Institutional
43.78 3 y p.a(%)
Question:
Does the APRA stats take into account those withdrawing lump sums then re-contributing either to super pension (maybe to a different fund) or to an annuity product?