POWERED BY MOMENTUM MEDIA
Retirees are not unnecessarily frugal
The amount retirees draw down their super is rational and does not point to unnecessary frugality, according to Rice Warner.
In an analysis, the research house said the Retirement Income Review’s suggestion that retirees did not draw down enough of their super was only based on small studies which coincided with high investment returns.
Pointing to data of those who were aged 65 to 70 in 2000, Rice Warner said there was a trend in Age Pension dependency of the surviving pensioners.
“The trend shows that people do spend quite a bit of their accumulated superannuation early in retirement – more self-funded retirees shift to part pensions over time, and more part pensioners shift to become full pensioners,” it said.
“Overall, the behaviour appears rational and does not point to unnecessary frugality.”
People aged 65 to 70 in 2000
Source: Rice Warner
Rice Warner said while the overall dependency on the Age Pension increased with age, there were steps that could be taken to improve expenditure patterns in retirement.
It said some steps included:
- Increasing the drawdown rate from 5% to 6% between age 65 and 75 to encourage higher drawdowns from a tax-privileged environment earlier in retirement;
- Making those over age 65 draw down from their accumulation accounts as well as pension accounts – this would reduce those funds not needed for retirement but held in a tax-privileged environment; and
- Introducing default comprehensive income products for retirement (CIPRs) for those with more than (say) $200,000 account balances at retirement to encourage smoothing of their retirement income over the remainder of their life.
Recommended for you
Governor Bullock took a more hawkish stance on Tuesday, raising concerns over 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(%)
