2 billion reasons to fix retirement income

Except that you've in part built your super off the back of taxpayer support, so yeah, it sort of is all of our business.

"built your super off the back of taxpayer support"

Its hardly "support" in the usual sense when the taxpayer remains a net beneficiary of the "support".
It is the super fund member that supports the taxpayer every time they make a contribution of when earnings accrue in accumulation mode. Contrast this with with the aged pension or the NDIS when the taxpayer is always a net benefactor.

Paul, I usually sit in the keep out of my business camp, but the fact is the pot of money you have sitting in super is larger because it has been taxed advantageously, for the "sole purpose" of providing a retirement income. Call it an agreement, whatever, but you have been happy I presume to take the tax benefits, now its time to satisfy your side of the bargain. I do notice alot of comments about "changing super rules" but super was singularly intended to provide retirement income; the lower tax rates were to allow you to build a larger nest egg FOR THAT PURPOSE. Stupid loopholes where someone can accumulate tax advantaged funds and never actually take any form of pension is frankly taking the piss.

"someone can accumulate tax advantaged funds and never actually take any form of pension is frankly taking the piss."

Who is actually more guilty of the charge of "taking the piss":

1. Someone who accumulated funds for his/her own retirement (and paid tax by doing so) and is happy to NOT burden the taxpayer by NOT taking an aged pension, OR
2. Someone who FAILED to accumulate funds and is happy to burden the taxpayer by taking the aged pension.

Note:a superannuation balance becomes an assess-able asset for the Centrelink assets test once you or your partner reach Age Pension age whether of not you draw a pension

Totally agree Paul - none of anybody else's business whether I am in Pension Mode, or choose to leave all or part, in Accumulation. I have complied with all the rules to build our Super balances and have earnt, at 75, the right to some certainty in retirement. What is even more troubling is that every proposed "solution" for problems, we do not actually have, adds layer upon layer of complexity, bureaucracy and cost

Probus would be very suitable for Nick and David I think.

I have money in an Accumulation account. I leave it there because while I don’t need the extra income now, I am worried about the ability to pay for future Nursing Home fees etc. Happy to pay the 15% tax and not worry about managing the investment outside Super to get the same returns. We recently had a family emergency and fortunately were able to make a lump sum withdrawal.

"Happy to pay the 15% tax and not worry about managing the investment outside Super to get the same returns."

Withdrawal of lump sums from Disbursement Accounts is allowed. Except for some old (unconverted) 'Pension Accounts'.

Main reason for not moving all Super Accumulation capital taxed 15% into Disbursement Accounts taxed 0% is 'Transfer Balance Cap' limit.

Why pay the 15% tax needlessly??? Convert your existing accumulation account to a tax free pension account - save the 15% tax. For the mandatory annual withdrawl %, if you don't need the money recontribute it to a new accumulation account as a non concessional contribution (no tax) provided you are under the transfer balance cap - currently $2.1m . Over time you will be thousands of dollars ahead.

If my accumulation account is automatically converted to a pension account after age 75, where do my employ er superannuation payments go? I will still need an accumulation account unless I am able to have payments made direct to my pension account.

Peter, you simply open a new accumulation account which continues to collect your superannuation guarantee and salary sacrifice amounts. Importantly, the income in your pension account has become tax free.

My understanding is that only mandated super guarantee contributions can be made/accepted after 75. Is that not the case ?

"If my accumulation account is automatically converted to a pension":

Highly likely it Accum will not be converted to a 'Pension', or a Disbursement, rather the capital will be moved leaving the Accum. As is done now.

We do not want or need further unnecessary fiddling with our superannuation. Just leave our savings alone please. Especially our SMSFs.
This is a proposal to force retirees to do something they don't want to do. That alone makes it untenable.
The proposal fails to analyse the reasons and perhaps advantages of retaining funds in an accumulation account. It is therefore faulty and unbalanced.
It then goes on to say that if implemented it will cost government revenue, estimated at 1Billion $.
Then the authors say:
"Enforcement of this measure would require an adverse consequence – such as pensions being paid to the Tax Office"
NO.

Bingo! and an argument neatly made for why this 'forced nudge' is unfortunately necessary - because far too many SMSFs are inappropriately used a vessels for building, holding and ringfencing wealth vs. generating and drawing a retirement income - the actual, taxpayer supported, reason super accounts, including SMSFs, exist for.

If you want to use a tax sheltered haven and intergenerational wealth transfer vehicle, use a family trust, not a SMSF (hint: the clue is in the last two letters of the acronym).

"too many SMSFs are inappropriately used "

....so by rolling over our entire SMSF balance (accumulation and pension accounts) to an industry superfund that somehow instantly transforms an "inappropriately used" vessel to an appropriately used vessel ????

As noted above a superannuation balance becomes an assess-able asset for the Centrelink assets test once you or your partner reach Age Pension age whether or not you draw a pension

This is nothing new. Prior to the Costello fiddles you had to start a pension at age 65. Superannuation is for retirement, not estate planning and it should be compulsory to start withdraw (as a pension) when reaching age pension age ie 67.

All those who say it's my money and hands off, well it might be your money but it is in a concessionally taxed environment, so I don't see why certain rules shouldn't apply. If you don't like the rules, take your money out (bet you wouldn't as even the rules suggested in the article make it worthwhile keeping your money in that environment).

The thrust of this article is to improve retirees’ cash flow while also paying less tax by encouraging the conversion of accumulation accounts to pension accounts by certain ages. That also reduces the use of accumulation accounts as savings vehicles for estate planning.

The crunch comes at age 75 when according to this proposal, conversion to a pension fund with its mandatory pension withdrawals, becomes compulsory, but only up to the TBC. It means that people with large super balances could continue to use super as a savings vehicle for estate planning purposes. That does not comply with the legislated objectives of super.

What to do with accumulation accounts after age 75. The solution seems simple. We could introduce mandatory capital withdrawals from taxed accumulation accounts after age 75, say 10% per year. Alternatively, we could require that accumulation accounts be cashed out at age 75. Would there still be a need for a Div 296 tax or a death tax?

I agree with Jon and the two authors of this paper, and believe both sides of politics should support this move.

"What to do with accumulation accounts after age 75.":

If 10% or 15% tax of Accumulation Account returns is not enough to slake government thirst, apply the same age based withdrawal rates as for Disbursement Accounts.

The capital that would squeeze out of Super would flow into investment companies paying dividends and franking credits to shareholders paying 0% tax on their grossed dividends.

From 15% tax to 0% tax for most Super beneficiaries with modest Accumulation Accounts.
[ Tax% when funds weighted? ]

While people are working, it is acceptable for legislation to apply universal rules to super; accumulation is a “one size fits all” system.
However, every retirement is individual, so attempting to apply a one size fits approach no longer works.
My money in super (I am over 70) is there for specific and deliberate reasons. It is not in any way “stranded”.
No matter how well-meaning your proposals may be, please do not forget that every retirement is individual. For many members, your proposals will not be appropriate.

Leave it alone. I can manage my super / pension without more interference from Government thank you very much.

And what of the calls for the aged to contribute more to their health care costs, not to mention preparing for RAD payments to aged care providers.

I for one want my super intact for these rainy day scenarios, not fritted away in a fortnightly pension I neither need nor want.

And the ‘compulsion’ aspect come age 75 really makes me see red. This is exactly the time you will be looking for a nest egg to fund failing health scenarios.

Being required to take money out of super as a pension or lump sum at a certain age does not mean you have to spend it!!!

It just means the funds are no longer concessionally taxed!

Wealth in retirement increases faster when kept in Accumulation Accounts rather than in Disbursement Accounts WHERE the Super Beneficiaries have personal wealth generating income of more than 2 * $31,888 per couple resulting in a marginal tax rate of 28% and more due to the roll off of the SAPTO rebate.

Disbursement Accounts force retirees to withdraw age based minimums and the money is transferred from a 0% tax rate to 28% tax rate WHEREAS Accumulation Accounts have tax rates of 10% and 15% (which is less than 28%).

But the difference between (Accumulation Account + Pesonal Accout) and (Disbursement Account + Personal Account) capital growth is small.

Much better for retirees if they could stick to withdrawing capital from Super as and when they want.
No problem if some want to make that every second Tuesday.

My MyCapital package does NOT require super funds to take any new action.

SAPTO for a single person in 2026 is $34,919.
For a couple it is $61,988 or $30,994 each.

When the bottom marginal tax rate drops to 14% in 2027-28 those figures will be
Single SAPTO: $37,374
Couple SAPTO: $65,644 or $32,822 each

"SAPTO for a single person in 2026 is $34,919.
For a couple it is $61,988 or $30,994 each.":

SAPTO and LITO combined for 2025-26 results in effective tax-free threshold:
SAPTO and LITO (single) $35,813.
SAPTO and LITO (partnered, not illness separated) $31,888.
More detailed:
https://www.challenger.com.au/adviser/knowledge-hub/Articles/Whats-that-threshold-from-1-July-2025

For 2027-28 using https://paycalculator.com.au/

SAPTO and LITO (partnered, not illness separated)

Taxable Tax
$32,922 $0.08
$33,022 $26.08

Marginal tax rate:
= (26.08 - 0.08) / (33022 - 32922)
= 26.00%

“the money is transferred from a 0% tax rate to 28% tax rate WHEREAS Accumulation Accounts have tax rates of 10% and 15% (which is less than 28%)”

But the 15% rate applies to earnings on the ENTIRE balance in an accumulation account whereas the 28% may only apply to earnings on the amount drawn from a disbursement or pension account.

For example if $1M resides in accumulation and earns 5% the tax payable is 1MX0.05X0.15=$7,500 leaving $1,042,500 in accumulation after tax.

If the $1M resides in disbursement the after tax balance will be $1,050,000 but a minimum of 5% must be drawn for persons over 65 leaving $997,500 in accumulation while $52,500 will be taxed $52.5Kx0.05x0.28= $735 outside super in the following year (assuming 5% earnings and 28% tax rate).

So it may be a choice between paying $7500 tax in accumulation or only $735 outside super.

Where to keep capital: In Super Accumulation Accounts or Personal Accounts?
Simple case; assume return rate is same.

IF Personal Taxable Income is less than Personal Tax Free Threshold ((= 2 * $31,888 for SAPTO couple)
THEN Personal Marginal Tax Rate 0%.
ELSE Personal Marginal Tax Rate is 28%+

Super Accumulation Tax Rate is 10% or 15%.

Estimate of how much Personal Capital will result in Personal Income exceeding Personal Tax Free Threshold Income:
Example rate of return 5%;
= (2 * 31888) / 5%
= $1,275,520

WHILE Personal Tax Free Threshold Income is not exceeded, and not likely to be exceeded, move capital from Super Accumulation Accounts to Personal Accounts.

An investment company can retain profits and franking credits and pay dividends in amounts calculated to ensure each shareholder's Personal Tax Free Threshold is not exceeded and 0% tax rate is not wasted.

@ Dudley,

If I'm over 75 and my mandatory ABP is 6.0% on say $550,000, is $33,000 in the initial year.
Let's also assume that I hold a balanced portfolio 50.0% equities and 50.0% cash and fixed interest.
If as we have seen in recent times the level of volatility in market has swung between 6.0% -10.0% down.
If we assume in an account-based pension, if $33,000 was taken as mandatory pension payment and the portfolio revealed a conservative reduction ($517,000 @ -6.0% =$31,000) the account balance would look something like $550,000 - $64,000 = $486,000.
These figures become worse in an ABP on a year-by-year basis, because the portfolio has to generate at least 10.0% to replace monies either lost or withdrawn from the pension account.

It's been made very clear for a very long time; governments are struggling to pay Centrelink pensions.

Can someone explain to me in uncertain times and extreme volatility, why paying 15.0% tax on a balanced portfolio in accumulation which probably amounts to around $1,800 - $2000 a year makes a 75-year-old worse off
I think that's why a lot of the older generation are holding off on going to ABP's but knowing they can access lump sums anyway without being forced to do so.

"Allan Abrahams":
"Can someone explain to me", you did not state the amount of personal capital / earnings.

Presuming returns are the same, capital grows more when;
. withdrawn from accounts with the largest tax rate, and,
. deposited in accounts with the smallest tax rate.

Living expenses are the same regardless of the origin of the money.

Age based withdrawals from Super Disbursement Accounts to Personal Accounts are required.

A non-contributing retiree has these tax rates:
. Income greater than SAPTO tax free threshold (= 2 * $31,888 for couple), 28%+.
. Super Accumulation Account non-capital gain income, 15%.
. Super Accumulation Account capital gain, 10%.
. Super Disbursement Account 0%.
. Personal income less than or equal to SAPTO tax free threshold, 0%+.

Personal income tax rate is not fixed; variable income can result in unused 0% tax rate one year and 47% tax in another year.

This is avoidable by keeping capital in super, such as Super Accumulation Accounts, where rates are fixed.

That is efficient where the SAPTO beneficiary's personal marginal tax rate (28%+) is always larger than the Super Accumulation Account (15%).

It is not efficient where the beneficiary's personal tax rate is often 0%.

Then an Investment Company, typically with the Super beneficiaries as shareholders, each with a different class of ($1) share, holding the capital is more efficient as the company can retain profits [associated franking credits held by ATO] and pay tax efficient dividends for each shareholder, grossed up by franking credits.
That avoids wasting unused 0% tax rate and paying more than 0% personal tax rate.
ATO does not pay interest on the franking credits.

Presuming the maximum allowed amount of capital has been moved from Super Accumulation Accounts to Super Disbursement Accounts, one obvious reason for keeping funds in Super Accumulation Accounts is that has the smallest tax rate available to the beneficiary's, which occurs when income from their Personal Accounts is mostly more than the SAPTO tax free threshold (=2 * $31,888 for couple).

The only reference to TBC was for SMSF's >75yo.

Would be happy to allow funds to nudge but the ultimate decision should be the members.

No more nanny state please.

The intention here is to require people to “opt out” of a default pension account rather than making a conscious choice to “opt in” as they do now.

There is no incentive for govt to initiate an action like this

"Further, by normalising drawing down from age 65, it will enhance superannuation’s role as a provider of retirement income. For older Australians, it will simply lead to more income – and hence better retirements.":

Super converts income (contributions, returns) to capital.
Beneficiaries withdraw capital as cash from Disbursement Accounts, not income from Pension Accounts.
Same as withdrawal from a bank is of cash capital, not income.

This analysis relies on people maintaining the same investment option when they move from accumulation to pension phase. With your example of $450,000 being put into pension phase, the tax saved is $4,185 ($450,000*0.062 earnings*0.15 tax), but if the pensioner elects a lower-risk investment option, this could wipe out that benefit. For example, if earnings in the pension phase were 5.2%, the return foregone would be $4,500. As people age, and see the nature of their money as more cashlike, it's possible they'll choose a more conservative option in the pension phase and may not be better off with that decision.

Hi Sarah. We propose that the MyIncome design (including the investment strategy) would be set by the fund and would not require any decision by the member. Hence any decision to 'step down' in risk would be one taken by the individual (e.g. based on their personal risk preference), rather than being the result of accepting the MyIncome offer.

Hi Sarah,
I would suggest to you that changes to a portfolio in retirement would have been adjusted @60.
There may be adjustments to individual investments along the way but depending on client risk profiles and time frames that's unlikely to change even if they had been in high growth portfolios before 65.

What most people in this forum seem to be ignoring is that nothing is static in investment returns and financial planning is not an exact science.
Portfolio's move, sometimes with extreme volatility and if you've been around for some time, nothing is guaranteed.
But as people age, where portfolio's may drop by 6.0% or more, time isn't on their side to wait for recovery.
What will acerbate that issue is, if people are forced to go into pensions from accumulation increasing the amount pensions need to earn to remain viable.

As people before, have alluded to, other retirement costs are increasing, where does that money come from?
It certainly won't from government, especially as the country approaches $1 Trillion in debt.

If it were possible to contribute to a pension account there would be far fewer accumulation accounts held by people aged 65 and over. Commuting and restarting a pension every few months to move money from accum to pension is not an efficient process. There currently are around 760,000 people aged over 65 currently in the paid labour force. A number of organisations have argued for that change. Some individuals also may want to maintain their balance (or part of it) in an accumulation account because they find it a better tax environment and better return environment than taking their money out and putting it into a bank account.

Having worked until I was 76 I still have an accumulation account. I have been drawing a pension from my pension account for a number of years. My wife died 3 years ago and her pension account became mine under reversionary provisions. Apparently now, if I want to turn my accumulation account into a pension account I have to shut both pension accounts down to start again. Given they contain individual share, ETF and LIC holdings this becomes messy and expensive. There should be a simpler way of doing this and frankly, I can't be bothered, so the accumulation account will stay as it is unless there is a crisis causing a desperate need for those funds.

Google: "I have a reversionary pension from my wife. Can I commute my existing non-reversionary pension account to my existing accumulation account and then commute my accumulation account to a new pension account OR can I commute my existing accumulation account to a new additional pension account?":

'Yes'. The revisionary pension can (should) be renamed but not stopped.

Your accumulation and pension accounts can be commuted to and fro, split or combined as 'normal'.
Independent of revisionary pension.

Anyone who's ever worked in super - retail fund or industry fund - knows how disengaged with their superannuation a huge percentage of their members are. And as a result of that disengagement, they often also have a very low level of knowledge. It's those people who might well benefit from moves in the direction mooted in the article. First Links readers, by definition, are not those people. I wouldn't like it either if it was applied to my super as I know what I'm doing, thanks very much, but it's not aimed at me. Or you.

As someone said above, as a "nudge" mechanism, or "opt out" mechanism, I have no problems with the suggestion, so long as it remains that way. But "paying pensions to the ATO" is a hard no.

Presumably the authors are aware that currently only $2 million can be transferred from accumulation phase into pension phase, and yet they don't seem to have addressed this issue. I'm sure that there is some number of people who have less than that balance and haven't moved their super to pension phase, but I would assume that a large portion of the $326 billion is money that isn't allowed under current legislation to be moved into pension.

So what other changes would be proposed to make this possible?

"I would assume that a large portion of the $326 billion is money that isn't allowed under current legislation to be moved into pension":

See 'Estimating Australians’ stranded accumulation balances' on page 7;
https://content.actuaries.asn.au/resources/resource-ce6yyqn64sx3-2093352434-60794
Plenty of room for estimation errors.

Page 8: 'Consider an individual aged 65 with a superannuation balance of $450,000 in the accumulation phase.'
Table has calculation errors. Not explained by tax in savings account which would be 0%.
'Total balance after five years ($) 607,904 601,627 607,489 613,622 620,036'
Actually calculates to:
"Total balance after five years ($) 607,904 605,963 610,632 615,488 620,536"

STOP INTERFERING!!! There are enough rules, leave the retired alone to enjoy the time they have left (may not be long with the constant harassment).

I would argue that many of the 1.5m who have your so-called "stranded assets" do so because they don't understand the benefits of converting from Accumulation (15% tax) a to a Tax Free pension, or the options available if they don't need to spend the mandatory annual withdrawls.

As an example, assume $500,000 in super earning 8% per annum, and taxable income of 5%. Taxable in year 1 - $25,000 per annum. And the person doesn't need the money.

Leave in Accumulation: Pay tax $3,750 which will increase each year as the balance grows.

Start a Pension:
1. Tax Free - $0 tax
2. Mandatory Withdrawl up to 74 - 4% = $20,000
3. Options for Withdrawl: (A)- Recontribute into a New Accumulation account as a non concessional contribution (no tax) or (B) Invest outside of super with up to ~$22k income tax free ($44k for a couple) - equates to about $440k / $880k in investment assets.
4. The New Accumulation Account (15% tax on income) can be converted to a tax free pension (in time) if under the transfer balance cap of $2.1m.

Net effect, the tax saved of $3,750 (increasing every year) will compound and you will be tens of thousands a year better off.

However, I would amend the proposal to make conversion to a conversion to a tax free pension account at 65 or 67 automatic, but with an opt out option to remain as accumulation for those who wish. And IMPORTANTLY, explanatory info provided by industry or retail superfunds to those who are about to turn 60 or 65 explaining the pros and cons of converting to a pension or remaining in accumulation - in fact this should be done now.

This response will help some people but not others. We all have different scenarios and should be able to make our own decisions within the rules. In my case, at 76 I can’t recontribute to Super. I would have to take 6% income ie 30,000 and invest it myself as I don’t need the extra income. Not interested in new investments. Is $30k plus (each year) in the bank earning 4.9% better (including having to add the bank interest to my tax return where I already pay 22% tax on my other income) than 8% in Super even with 15% tax . No need to do the Maths. Peace of mind knowing that Age Care fees and emergencies should be covered by my Super is worth more.

"Peace of mind knowing that Age Care fees and emergencies should be covered by my Super is worth more.":

That gives time to examine options dispassionately.

Google:
'I have $500,000 in my Super Accum Account. Senario Accum: I leave all the money in my Super Accum Account earning 8% per year with earnings taxed 15%. Senario Pension: I move all the money to my Super Pension Account earning 8% per year with earnings taxed 0% and each following year I move 6% of the Super Pension Account balance tax free to my Personal Account earning 8% per year with earnings taxed 30% . Senario Personal: I move all the money from my Super Accum Account to my Personal Account earning 8% per year with earnings taxed 30%. Which Scenario results in the largest account balance?'

Eliminate ambiguities when making the query text. AI knows about Super and many common ways to resume ambiguities but may select a way you did not intend.

Be sure to check: 'Dive deeper in AI Mode'.

'The Super Pension Account (Scenario Pension) results in the largest combined account balance.
By moving your funds to a pension account, you eliminate the 15% tax on investment earnings within the fund. Even after moving 6% of the balance annually into a more heavily taxed (30%) personal account, the tax-free compounding of the remaining 94% of the balance within the pension account provides the strongest growth.'

Not that the difference in outcome between Scenario Accum and Scenario Pension over 20 years is obvious but insubstantial.

"at 76 I can’t recontribute to Super":

You can commute Accum to Disbursement if under Transfer Balance Cap.

The minimum pension payments would mingle with your other personal money with little effect on outcome due to the slight difference between 8% and 4.9% over the initial small amount of capital moved.

"Not interested in new investments.":

Several ETFs do almost precisely what larger Super funds do.
Might Jazz up personal returns if risk is acceptable.
Daily performance in close lockstep.
May complicate tax time slightly by having to wait for AMMA statements.

My body my choice.
My super my choice.
Don't tell me what to do with my super.

Please stop talking about this in the press.
“From age 65 there is no legal barrier to members moving their super accounts into pension phase, even if they are still working.”
The Government will see the solution. For those not retired, or even worse for all, is to align the pension phase age with the Government aged pension 67!

Also companies like AustralianSuper will need to allow members to have two Member Direct accounts. Currently members can only have one Member Direct account and the total in the account has to shift into the pension phase. At present the only way to have a pension account where the member has control of their funds in both the pension and acculation phase accounts is to open an account with another APRA company. People may think the extra tax paid is the price of having control of their funds and to avoid the black box accounting of the large APRA funds.

I am struggling with your comment without mentioning the Transfer Balance Cap simultaneously:

From age 65 there is no legal barrier to members moving their super accounts into pension phase, even if they are still working. And as balances in pension phase earn tax free returns (rather than being taxed at 15%), members can boost their retirement wealth simply by instructing their funds to transfer their accounts to pension phase upon reaching age 65.

The Transfer Balance Cap is currently $2million

The Superannuation (Objective Bill) 2023 was passed into law in late November 2024. It defines the objective of superannuation in the following terms: ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’.

An accumulation fund in retirement has no mandated requirement to make any withdrawals, ever. The income produced by the fund can be reinvested and it may grow undisturbed until death, which is a cash-out event. But some people using an SMSF, have created an intergenerational super fund by using withdrawals from the parent’s account as contributions to the kids account, while leaving the fund assets intact.

An accumulation super fund makes an attractive investment structure for an asset such as a family farm or business because it is concessionally taxed at only 15%, and makes an ideal estate planning tool. While that continues, there will be constant calls to increase taxes on everyone’s super.

It’s much more difficult to hold a farm or business inside a tax-free pension fund because that comes with mandatory pension payments that must be in cash and which increase with age. For example, at age 80 it is 7% of the fund balance. At some point the cash generated by the fund will be insufficient to pay the pension and assets need to be sold for cash. That is obviously a problem with an illiquid asset like a farm or residential property.
It is never a problem with an APRA fund because every pension is paid by selling a number of units in one or more of your investment options. And that exposes you to market risk and sequencing risk.

Our system is not admired in the sense of other countries using it. Far too flawed. A good starting point would be Prof Ron Bird and his basic question-“Why so generous when it’s mandatory?”. Better perhaps just to point out it's way too biased against the young and low earners with contribution tax salary-sacrificed and super earnings separate from personal earnings.
So, don’t start just on retirement phase.
If we focus just on retirement phase I would simplify to four aspects-firstly,no zero tax rate on pensions-one 15% rate, secondly, super balance limited to an indexed $2m-with cash removal thereafter and no further contributions, thirdly, super is withrdrawable for housing purchase and major upgrades, and finally, no mandatory withdrawals at any age, the latter because super is not just about income but is now part of estate planning including allowing for aged-care possibilities.

Still may need some income protection on super earnings for low-income earners, but far less generous to the wealthy, and would save heaps.

One could go further-remove contribution tax, set maximum contribution rate at the Henry original(and only ever?) study rate of 9-9.5%, and tax super as a component of personal earnings(force industry funds to release data). One Nation or the Coalition could adopt to save the budget from mass destruction and, properly explained, far fairer to young and low-income voters.

I struggle with two basic flaws in this proposal. Many higher asset owning members will prefer paying 15% on super income to having mandatory pension withdrawals, many with a life-expectancy at retirement of 90 years or over. Secondly, retirement concerns are not just income but include the unknowable of future health with a real risk that one member of a couple needs to retain the family home while the other needs a significant future capital sum for satisfactory aged care.

John - there is no reason that mandatory pensions withdrawals need to be spent. We are arguing that most Australians over 65 would have more savings available for old age if their super is relocated to pension phase. Drawdowns can be invested outside super. Our full paper which is linked in the footnote includes an worked example showing how this will leave most super members better off.

There is a new cohort of pending retirees/ retirees (25-30%) who have an existing mortgage debt approaching/reaching retirement.
If the change is to a pension income, this may mean they cannot pay off their mortgage, and the only other alternative may be selling.

Already done:

Google "explanatory info provided by industry or retail superfunds to those who are about to turn 60 or 65 explaining the pros and cons of converting to a pension or remaining in accumulation":

Can lead a horse to water, can't make them drink.

If that is not enough, perhaps they are not sufficiently competent to be left in charge of their super. Might be scammed, ... . ATO to be their guardian?

Here's a different perspective. Tax the earnings of all superannuation accounts (including pensions) at 15%. If there is approx $545B in pension phase (APRA 2025) and making some conservative assumptions that it earns 4%pa income including capital gains and pays a net tax rate of 11% (after costs and franking credits) this would result in roughly $2.4B in increased tax revenue. This could pay for:
1. Maintaining the private health insurance rebate for the over 65's; along with
2. Providing a further 15,000 Support at Home aged care packages; and
3. Employing another 9,000 staff in the aged care sector.
It would also simplify the system by allowing people to either retain their money in super and draw it down as they need it (tax free withdrawals), or draw a regular income (tax free payments on a regular basis) or leave it to accumulate for whatever reason they like. So, those benefiting from the tax concessions are contributing to the needs of their demographic.
I will add one sting in the tail - the increased earnings would be subject to death benefits tax each year. Now........how do we get rid of the "recontribution strategy"??????