POWERED BY MOMENTUM MEDIA
Super funds must engage members in pre-retirement phase
|
Too many Australian retirees risk running out of money by taking a lump sum superannuation payout rather than considering the account based pension (ABP) option, according to BUSS(Q).
A survey of the Queensland superannuation fund’s members found that only 20 per cent of retiring members took the ABP option, with the remaining 80 per cent opting to take their investment in a lump sum.
BUSS(Q) chief executive David O’Sullivan said he was concerned that four out of five retirees were taking all their money at once, rather than choosing an ABP, which distributes money over time and has tax advantages.
“It’s hard to budget with that amount for 20 or more years. Australia runs the risk of having to cope with retirees who have taken lump sums and just run out of money,” O’Sullivan said.
“The temptation is to just stick the money in the bank and try to negotiate the best available interest rate. Unfortunately, there is not capital growth in cash, so this usually starts an ever increasing spiral of lump sum draw downs on their capital,” he added.
He said the onus was on the superannuation industry to do a better job of engaging the 80 per cent of members who take the lump sum — firstly, to save more for retirement and secondly, to understand that a pension could be a smarter choice in the long-term.
O’Sullivan’s comments come following a report by the Association of Superannuation Funds of Australia that found even older retirees still need more than the age pension to live a modest lifestyle.
“It’s a real concern that the ‘old age’ pension won’t be sufficient for the average Australian to have a reasonable retirement lifestyle. It will be up to each individual to bridge the gap to ensure their retirement years are enjoyable,” he said.
AUTHOR
Ashleigh McIntyre
Recommended for you
Future Group is set to take on nearly $1 billion in funds under management (FUM) and welcome more than 100,000 new members following two significant successor fund transfers.
Insignia’s Master Trust business suffered a 1.9 per cent dip in FUA in the third quarter, amid total net outflows of $1.8 billion.
While the Liberal senator has accused super funds of locking everyday Australians out of the housing market, industry advocates say the Coalition’s policy would only push home ownership further out of reach.
Australia’s largest superannuation fund has confirmed all members who had funds stolen during the recent cyber fraud crime have been reimbursed.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
90.28 3 y p.a(%)
2
GAM LSA Private Shares AU I
37.08 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.44 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.12 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
28.28 3 y p.a(%)
