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 profit-to-member super fund’s MySuper default option has returned 9.85 per cent for the financial year 2024–25.
Colonial First State (CFS) has announced solid double-digit returns for its MySuper balanced and growth equivalent funds during the financial year.
The super fund’s Future Saver High Growth option delivered an 11.9 per cent return for the financial year 2024–25, on the back of a diversified portfolio and actively managed investment strategy.
HESTA has delivered a 10.18 per cent return for its MySuper Balanced Growth option in the 2024–25 financial year, marking the third consecutive year of returns above 9 per cent for the $80 billion industry fund’s default investment strategy.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 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?