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In fact, most people have no super when they die

That Australians do not spend their super in retirement, and supposedly have more super and other financial assets when they die than when they retired, has become a trope in narratives about the strengths and weaknesses of the Australian superannuation system. For instance, the recent Retirement Income Review Report stated that:

“This [the findings of a number of studies] suggests that retirees tend to consume only the income derived from assets and not the assets themselves.”

Despite such claims being widely quoted, there is little or no evidence that the typical Australian dies with around the same amount of financial wealth as when they retired, other than cases where there was not much financial wealth in the first place. Sadly, the main group having the same amount of superannuation when they died as when they retired are those who retired with no superannuation.

Australian Taxation Office data on superannuation balances

ATO data indicates that current superannuation balances for those aged 70 and over are, in most cases, quite modest (Chart 1 and Table 1).

The 1.02 million individuals with superannuation equate to around 37% of ABS estimates of the number of Australians aged 70 and over as at June 2018. Around 1.7 million Australians aged 70 and over have no superannuation at all.

For the minority aged 70 and over with superannuation, the median balance falls within the $100,000 to $149,000 range. Only around 185,000 individuals had a superannuation balance of $500,000, with 27,325 individuals having more than $2 million in superannuation.

Around 14% of those aged 70 and over with superannuation continued to receive the benefit of employer contributions.

The ATO statistics also show a fall in the incidence of superannuation that increases with age, particularly for females (Table 2).

As at June 2018, 54% of males aged 70 to 74 had superannuation, while only 29% of males aged 75 or more had superannuation. For females, 29% of those aged 70 to 74 had superannuation, falling to 17% for those aged 75 plus.

In comparison, 97% of males and 88% of females aged 55 to 59 had superannuation.

Given that compulsory superannuation for employees has been in place since 1992 (with coverage rates around 40% before that), these falling rates of superannuation coverage mainly come from many individuals withdrawing all of their superannuation over the course of their retirement.

Only a very small proportion of people have substantial balances at any stage after age 70.

Evidence on superannuation balances shortly before death

ASFA also has investigated what sort of superannuation balances people have just prior to death.

Through making use of data from waves of the Australian longitudinal household survey, HILDA, it is possible to identify people who died and their age at death. It is also possible to track their last observed superannuation balances in a period of up to four years prior to death.

Table 3 shows the superannuation status of individuals in the HILDA survey sample who died at the age of 60 or older in the four years to 2018. Table 3 also shows the mean balances, the percentage of individuals with a positive superannuation, and for those with positive balances, the mean and median.

In the various tables the sample sizes for those who did have superannuation are of relatively small size. Accordingly, caution is needed in interpreting the mean and median figures for the relatively small proportion of those in the survey who still had superannuation prior to death. However, the pattern of these results makes sense with, for instance, declining proportions of those with superannuation in the older age groups examined.

The HILDA data in Table 3 shows that 80% of people aged 60 and over had no super at all in the period of up to four years before their death.

For the minority that still have superannuation, the amount can be substantial, with a mean balance of around $500,000 in 2014 for those who died in the four-year period to 2018. This figure is well up on the figures for 2010 and 2006 (see the Appendix to this paper), reflecting the maturing compulsory superannuation system and that some individuals have very high balances.

As shown by Table 3, those who were aged 60 to 69 at the time of their death were more likely to have superannuation than older age groups.

Many in this age group would still be working and/or would have been drawing down on their superannuation for only a limited period. This younger cohort also would have had the benefit of compulsory superannuation for longer periods than older age cohorts.

However, people who die in their 60s often have medical issues impacting on their ability to work and any superannuation available is often taken as a lump sum retirement benefit or TPD release prior to death.

For those aged 70 to 79 the incidence of superannuation starts to fall away with only around 25% still having superannuation in the period before death. Mean and median balances are also lower for those who still had superannuation.

For those aged 80 plus, the incidence of still having superannuation is quite low, with over 90% having no superannuation in the period of up to four years before death. However, a very small proportion still had superannuation, sometimes a substantial amount.

For the age 80 plus group, only 5% of that group had more than $110,000 in superannuation in the period of up to four years before their death. The average superannuation balance for the 10% of this age group that still had superannuation is around $375,000, reflecting the small number of retirees with high superannuation balances.

Men are more likely to have superannuation than women in the four years before death. For those who died in the period 2014 to 2018, only 15% of females aged 60 plus at death had any superannuation compared to around 25% of men. 

The ages at which people die and APRA data on death benefits

There are far fewer superannuation death benefits paid than there are deaths in Australia. As well, a significant proportion of superannuation death benefits from funds relate to individuals who have not yet retired. Insurance benefits in regard to such individuals also boost death benefit payments. For these individuals, having a significant superannuation death benefit available is a strength rather than a weakness of the superannuation system given that in most instances there will be a spouse, infant orphan or other financial dependent.

Most deaths in Australia occur after age 60, with around 87% of deaths occurring after that age (Chart 2).

Comparatively, in 2018 there were over 18,500 deaths of persons aged 20 to 59. The great bulk of this age group would have had a superannuation account or accounts, given the compulsory superannuation system and high levels of labour force participation of those in that age group.

APRA statistics indicate that in 2017-18 around 16,000 life insurance claims were paid. The great bulk of those would have related to those aged under 60 given that insurance cover generally ceases at age 65 and labour force participation begins to fall after age 60, leading to a cessation of insurance cover for those concerned.

APRA statistics indicate that in 2017-18 funds with five or more members paid out 40,000 superannuation death benefits and a further 9,000 benefits linked to a terminal medical condition. This compares to around 157,000 deaths of individuals aged 15 and over.

The average benefits were around $128,000 for death benefits and around $90,000 for terminal medical condition benefits. These averages are boosted by the 16,000 or so accounts which had average life insurance payouts of around $147,000.

After adjusting for deaths of the 18,500 individuals aged under 60 (the great bulk of which would have had a superannuation balance) and for multiple accounts, the APRA statistics are fully consistent with HILDA data with only 20% of those aged 60 and over having a superannuation account balance when they died.

The Retirement Income Review Report concluded that in 2019 one in five dollars of benefit payments from superannuation funds was for death benefits. The source of the data underlying that conclusion is not entirely clear. However, it is possible that it relates to the total death and terminal illness benefit payments as a proportion of total lump sum payments.

Calculations made by ASFA based on total benefit payments (including pension payments) and adjusting for death benefit payments (including life insurance payouts) for those who have not retired indicate that, for APRA regulated funds, in 2019 around one in eighteen dollars of total benefit payments were death benefits related to the superannuation of those who have retired.

While this ratio may fall to a degree in future, the calculation indicates that the superannuation system delivers benefits predominantly for retirement and related purposes.

Data on death benefits paid by self-managed superannuation funds (SMSFs) are not available. 

Conclusion

The vast majority of people exhaust all of their superannuation well before their death, with a smaller proportion passing on some superannuation to their spouse and with a relatively small proportion undertaking estate planning which benefits other generations.

This is consistent with the lived experience of most people and their families.

As a result, here are a couple of policy implications:

  • Given that a large proportion of current retirees have very modest superannuation balances, the case is strengthened for increasing the SG to 12% (as currently legislated) so that retirees can live in retirement with dignity.
  • There is a small proportion of retirees who have superannuation balances greater than can be reasonably justified given the tax advantages provided to superannuation. ASFA recommends that individuals be required to withdraw any superannuation they have that is in excess of $5 million.

Ross Clare is Director Research and Resource Centre at The Association of Superannuation Funds of Australia Limited (ASFA). This article is general information and does not consider the circumstances of any individual.

 

 

33 Comments
John
May 21, 2021

When completing these figures how do they incorporate individuals receiving their superannuation as Defined Benefit payments? They receive this payment until they die, possibly for over 20 years, yet there is no comparison asset value applied when compared to a person with their own superannuation fund. A lot of government staff are still retiring with Defined Benefit superannuation.

Also I recently had a chat with an old farmer aged about 80 years old. He was not impressed that his sister could live in a $5 million house in Sydney and receive the full pension, yet part from around his house block, his property was included in his assets. He was determined he was not selling the property. It was his home.

Phil
April 30, 2021

Single members remove funds from super to avoid death benefits tax, is that compensated for here?

Lisa
May 06, 2021

Exactly!
The system also makes sure that as people age they are required to take an ever increasing percentage of their funds out of superannuation every year, designed presumably to make sure that the we don't have anything left when we die.

I Tsang
May 20, 2021

Exactly! I think very likely I have to sell some of my shares, so to make up the mandatory withdraw percentage in the next financial year. Hopefully the share price not going down, and I have to sell it at a lost.

Paul
April 22, 2021

Everyone is always talking about what we dont have in retirement. A 9.5% or even 12% employer contribution will NEVER be enough to support anyone in retirement. There is no compulsion for the employee to put one cent towards their retirement. Look at the Singapore model......To 55 years of age the employer puts in 17% and the employee 20% ......thats 37% contribution.Singapore has no free old age pension, rent assistance etc.
I think its about time people are made to contribute to their own retirement instead of just expecting others to pay for them.

Dudley.
April 30, 2021

"A 9.5% or even 12% employer contribution will NEVER be enough to support anyone in retirement.":

Saving from to 67 from 27, 12% contribution, retirement return 6.27% with 2% inflation to 97 from 67; relative to working income per year of 1, fund would have to return 6.27% real net:

= RATE((67-27), -(1-15%)*12%, 0, -PV((1+6.27%)/(1+2%)-1, (97-67), 1, 0, 0), 0, 0)
= 6.27%

"Singapore model":

Is retirement, housing, medial and insurance schemes rolled into one:
https://en.wikipedia.org/wiki/Central_Provident_Fund#Housing_Schemes

Trevor
April 18, 2021

Ross , you say "Despite such claims being widely quoted, there is little or no evidence that the typical Australian dies with around the same amount of financial wealth as when they retired, other than cases where there was not much financial wealth in the first place. Sadly, the main group having the same amount of superannuation when they died as when they retired are those who retired with no superannuation." and " these falling rates of superannuation coverage mainly come from many individuals withdrawing all of their superannuation over the course of their retirement.
Only a very small proportion of people have substantial balances at any stage after age 70."
And from BeenThereB4 : "there is sparse comment that 70%-to75% of Australians of retirement age depend totally or in part on the Commonwealth Age Pension."
Since about 70% of the population actually RECEIVE Government welfare for MOST OF THEIR "WORKING
LIVES" these statistics can NOT come as a surprise to anyone ! If they have NOT ACCUMULATED much wealth along the way , such as a house , then they are unlikely to have much superannuation either !
It is NOT the fault of the 30% who do that the 70% don't......and yet the undercurrent in several of these "comments" is that POVERTY is all the fault of successful people and especially HOUSE-OWNERS..as though they have somehow manipulated the whole thing to their benefit and to the other's detriment.
For example : "But instead of focussing purely on super we should be looking at the total assets of retirees to get a full picture of their situation." "TOTAL WEALTH. That means including the family home."
and ...."Ignoring the family home from the welfare based age pension test makes all of this discussion absolutely meaningless."
and ..."The Retirement Income Review had the task of putting the family home into the retirement income pot without using the coercion of the assets test. It remains to be seen how successful they have been"
and unhelpfully from Rob :"3] The issue is not the "quantum" in Super it is the fact that it is tax free in retirement [Costello] AND the fact the maximum withdrawals were also removed [Costello] allowing people to effectively avoid any tax at any time. Reinstate both and the Canberra problem goes away".
What problem Rob ? The same problem Lenin and Stalin had with the Kulaks in the Ukraine ?Success??
The SUPERANNUATION WAS TAXED as it went into the fund. There is nothing TAX-FREE about it !
To have it "released" they must satisfy one of the criteria , in this case , of having LIVED long enough !
Why does EVERY FINANCIAL DISCUSSION HERE end up with ideological and political solutions being
proffered INSTEAD of reason and mathematics ? Human nature I guess ! ....but.....let's not go there ...!


OzTrev
April 18, 2021

The prerequisite qualification for entitlement to the welfare age pension payment MUST INCLUDE - TOTAL WEALTH. That means including the family home.

Not including the family home creates the disparity in the value transferred on death as a tax free generational transfer of wealth. In instances the family home far exceeds the $1.7m retirement income transfer balance cap. Further, the pension valuation factors ranging from 4% to 14% and even you strictly take the minimum payment as a retirement income and if you do live to a ripe old age to get a congratulatory message from the monarch your Superannuation Retirement Income Fund balance would quite obviously be minimal.

Ignoring the family home from the welfare based age pension test makes all of this discussion absolutely meaningless.

Richard Lyon
April 18, 2021

Ross, why don't you do any longitudinal analysis of ATO statistics? Would it support your view? For example, 80% of males aged 65-69 in 2013-14 (the earliest year of ATO balance statistics) and 20% of those aged 70-74 represent the 2013-14 version of the 2017-18 cohort of males aged 70-74. From the ATO statistics, I estimate an average balance of about $354k for this cohort in 2013-14, compared with $445.5k in 2017-18. That's an increase of 26% in four years or about 6% per annum. As far as I can see, all cohorts of males and females experienced increases in average balances over this period, albeit that for younger cohorts the increases (generally >50%) are driven by contributions and returns. Consistent results (including the 6% per annum growth for this cohort) are obtained by comparing with 2014-15. The premise of this article simply doesn't stack up.

Ross Clare
April 19, 2021

Richard
I would use longitudinal data if the ATO made it available to people like me and I am confident it would support my findings.
Your comparison of averages is affected by survivorship bias. Many (but not all) of the balances going to zero and dropping out of the ATO averages for those with super were at the lower end of the scale. This leads to an increase in the average for the ever diminishing proportion of the specific age cohort that has superannuation as that specific cohort gets older. It also is apparent when you compare the percentages with super for different age groups when you look at the ATO figures over time. You can see this in the HILDA data as well, with detailed tables in my paper in the version published on the ASFA website.
The premise in my article does stack up.
Cheers
Ross

Jon Kalkman
April 16, 2021

Thanks to Ross it is clear that the group who died between 2014 and 2018 did not have much super. This is the same group that the Retirement Income Review unsurprisingly, identified as having houses worth 3 times the size of their super. This is the same group which left large bequests in their estate and were asset rich and income poor. Hence the self-evident observation that these people could enhance their retirement income by releasing some equity in their home.

Was the Retirement Income Review really talking about unspent super or simply talking about unlocking the store of wealth in the family home? We will never get a true picture of the size of unspent super at death because it can all be withdrawn at any time after the age of 60, for any purpose and tax free.

The Retirement Income Review had the task of putting the family home into the retirement income pot without using the coercion of the assets test. It remains to be seen how successful they have been.

Dudley.
April 16, 2021

"We will never get a true picture of the size of unspent super at death because it can all be withdrawn at any time after the age of 60, for any purpose and tax free.":

We have a crystal clear picture of the incentive to withdraw super at Age Pension eligibility age - to sinking it in the Principal Place of Residence - for the purpose of maximising Age Pension free money - due to an Asset Test taper rate which pays an extra $0.078 of pension for each $1 of reduced assessed assets.

"The Retirement Income Review had the task of putting the family home into the retirement income pot without using the coercion of the assets test.":

Which would server to leave the pensioner(s) without the capital - in the form of one or two home(s) - for Refundable Accommodation Deposit (RAD) for age care.

Currently, unless a home owner couple can make the SweeterSpot of ~$3,000,000 financial assets thereby avoiding the Age Pension, the incentive is to ensure having no more financial assets than the SweetSpot of $401,500 - and then there is an incentive to withdraw the lot and invest it outside super.

Super in retirement mode only makes financial sense for the wealthiest ~1% - due to the Age Pension Asset Test.

Neil
April 18, 2021

That's an interesting way of putting it. Effectivley 7.8% cash return, every year on investing in your own CGT free home, having a nicer place to live.
It's obvious that need to change for the greater good and common sense.
However, as usual, any political oarty proposing this will be torn to shreds by the other for political gain and sacrificed in the pursuit of its ideological agenda.

David
April 15, 2021

I don't see much point in any of this analysis when we know that people had ~3% going in in 1992. Most of them will have had 5-15 years of significant contributions before they retired. Basically for anyone over 70 they will have ended up with a small fraction of the amount in super that a 40 year old with a similar income will end up with (after accounting for inflation). Obviously a small minority had a lot in super of those who have died. In 30 years the figures will be completely different. I don't know how people's actions will change but their starting balances will have a massive change

Jack
April 16, 2021

David you make an excellent point. But that does not stop Ross from claiming that workers today, who already have more super than those in this analysis, need to have an increase in SG to 12% - giving them even more super. Taking the SG to 12% may or may not be needed, but it is dishonest to use Ross’ analysis to reach that conclusion.
As for the conclusion that super balances should be limited to $5 million, it is unclear how this analysis supports that conclusion, but it is consistent with industry funds bashing SMSFs and Ross talking up his book.

Ross Clare
April 19, 2021

David
The claim that I was challenging is that the bulk of current retirees only take the income from their super (and other investments) and leave the capital intact. The RIR report did not claim that this only happens with high balances. As the SG system matures and as the SG gets to 12% balances will increase, but the unfortunate reality is that median balances will be relatively modest for decades to come. They would be even lower without the SG going to 12%. It also should be noted that even before the SG came into effect around 40% of the population had superannuation as the result of both employer decisions and voluntary contributions.
Cheers
Ross

Peter Riddell
April 15, 2021

Why would any sane person die with money left in superannuation if they could possibly help it? If you've got assets left make sure your heirs get them not the government! No way should the findings in this article be seen to support an increase in compulsory superannuation contributions as stated in the policy implications. Let the individual decide how they want their wages and allocation of investments.

Andrew Smith
April 15, 2021

Interesting analysis and would be useful to also see forecasts on super for generations following for the duration of their working life, not to forget reminding Australians of the overall benefits. For example, the Gen X and younger cohorts who have started work from school with super, and compared with the future age demographic trends of the permanent population (increasingly aged with dependency ratios to match) to highlight why super is important.

Australia generally comes out in the top 5-7 globally for retirement income system sustainability along with Denmark, Germany, Switzerland, Canada etc., but in Australia there is much pressure from the LNP, think tanks, media, FIRE sectors and related who are actively campaigning against super, using bogus 'framing', research and analysis i.e. ignoring demographics (of which there is ample evidence elsewhere of related issues).

The super industry could be more vocal in media and explaining not just the benefits, but what happens to state budgets if you rely upon a state pension system (means and assets tested with primary residence excluded.... for now....), then middle class savings going into property; not most productive of assets and could lead to if not stranded, a later decline in real value with stagnant permanent population).

Further, there is plenty of evidence globally of state pension systems challenged e.g. reduced payments, access or near collapse due to ageing/declining populations and budgets not keeping up.....

John
April 15, 2021

Interesting article but one thing that you have possibly overlooked is the introduction date of compulsory super, if, as an extreme example, you are 95, you retired 30 years ago which would be 1990, which means that if you just had compulsory super, you only had it for a few years before retirement. While the benefit my children have is that they stated to contribute to super when they first started work so have 45 years of contributions to make and to compound.

d
April 15, 2021

There is little point in home owner couples with <= $401,500 in Age Pension assets who are satisfied with 2% return keeping capital in super.

They can earn $8,216 / y without loss of Age Pension - which is a return of >= 2.05% / y.

Just as well off by withdrawing all their super and investing it under their personal names.

Geoff Brooks
April 15, 2021

An important piece of work Ross, especially in the context of the RIRR findings. Unfortunately, the 'super in 4 years before death' table is a little dated compared to the others (2014 v. 2017-18). The influence of this on the proportion of Australian retirees with super is writ large by the fact that in 2017-18 the proportion of people with super in the 60-69 age group is well over 70% compared with 47% in 2014. For males, the median super benefit has also risen between $70k and $100k over the period. So the trend in super savings is, as expected, upwards as the system matures, with a bigger proportion having saved a more substantial benefit.

I have a number of issues relating to the veracity of all these pieces of research, all relating to how we can best inform a more holistic view of retirement wealth by household and the factors driving this. So, while super balances are growing, housing affordability is regressing. How many people now and in the future will still have mortgage or rental outgoings? What other forms of investment do they have etc?

The household view has always proved elusive because of how the systems underpinning the system are not able to aggregate household information. Two people living together, each with a median balance, will have a pretty favourable financial outlook and security in retirement, yet may individually be regarded as inadequately positioned, ignoring for the moment any access they might have to the age pension.

A positive take out from your work is that it busts the myth that most retirees live off investment income without having to sell down assets. Yes, there are some who have played the system well hold several millions (sometimes tens of millions) in the tax-free super environment and are therefore more focused on tax-effective estate planning, but they are few and far between.

Rob
April 15, 2021

No idea where the Retirement Review drew its conclusions from. Reality:

1] In retirement we are "forced" to draw down Super 5% till 75, 6% till 80, 7% till 85, 9% till 90, 11% till 95 and 14% pa 95+. Unless you are earning consistently more than that, your Super naturally declines. Would like to think I will earn 14% + at 95 but suspect not!

2] Given Australia's "death tax in drag" on Super's taxable element, anyone who has a terminal illness or short life expectancy, who does NOT withdraw all their Super, is stupid. Knowing your "date of death" a little more problematic.

3] The issue is not the "quantum" in Super it is the fact that it is tax free in retirement [Costello] AND the fact the maximum withdrawals were also removed [Costello] allowing people to effectively avoid any tax at any time. Reinstate both and the Canberra problem goes away

My guess is that the Feds will consider some taxation in retirement mode that might look a little like the rejected ALP policy of taxing in retirement over an income threshold. Was over $75,000 as I recall, but they will be wary as they know they won the last election on the back of the ALP's stupid Franking Credit attack

BeenThereB4
April 15, 2021

Nice piece of analysis Ross.

The other side of the coin is that there is sparse comment that 70%-to75% of Australians of retirement age depend totally or in part on the Commonwealth Age Pension.

For those with account balances of some substance (say, > $500,000) and being well-informed or receiving advice, these people may take action to reduce super balances before death. I had a husband and wife client who each had cancer with life-expectancy less than a year; they sold-down their super before death, and the proceeds became available to beneficiaries in their wills.

I think Jane Hume doesn't know what she doesn't know !






















Mart
April 15, 2021

BeenThereB4 - yep, there will always be hacks or smart strategies (take your pick on which is the best description) to better protect your capital from certain 'imposts' (including 17.5% "death tax" in the situation you reference) ! Given Steve / Jimmy in this blog have referenced franking credits, I'm reminded of a letter written by a fund manager (I think) in AFR regards Labour's franking credit plan at the last election along the lines of if Labour win then he will advise all his clients to commute pensions and cash out their accumulation lump sum. Thus the cashed out amount is subject to non-super system tax which of course will be minimised or erased by franking credits (no franking credits left on the shelf !). Also this sum has no super system restrictions (e.g min / max withdrawal limits, 'inheritance tax' for non dependents etc). Oh, and Labour don't get the revenue hit they were planning on of course. Around the same time there were a lot of comments / articles (Noel Whittaker most prominently) that suggested most folk have options for reshuffling to avoid the Labour 'hit' if they wanted to do that, and that the likely impact would be on poorer, older SMSF pensioners (despite Labour's allowances). Obviously a moot point given the election result but I think the real points are (a) careful about the law of unintended consequences and (b) there are often options to those impacted to restructure if they wish to (and are clued up enough to). As per my other comment, my real head scratcher on this article is how does the average punter make sense of 2 seemingly credible pieces of analysis (Retirement Income Review and AFSA) that end in polar opposite conclusions ?

Janis Flynn
April 15, 2021

BeenThereB4. In my opinion from personal experience I would say everyone should take out life insurance outside of Superannuation particularly outside Industry Funds. My experience was with REST (but I believe all Industry Funds have the same Trust Deed). The Trustee of REST took 12 months to decide on who would receive his Superannuation and Death Benefit even tho he had a non binding nomination of his father and me, his mother, and a Will with the same nomination. We were told that we would be given 50%, or 25% each. The Trustee said in a letter to me that he felt "this was fair". Fair is subjective. What is fair to one person, may not be thought fair to another. Even with a binding nomination if the nominated beneficiaries are not dependent then the binding nomination is invalid and goes back to the discretion of the Trustee. REST knew our son had his parents as beneficiaries as printed on his statements but never advised him that his nomination was worthless. I would say make Superannuation voluntary. It is a minefield. Take charge of yr own money and be in charge of who it goes to.

Mart
April 15, 2021

Expanding upon Kate's comment (which hits the nail on the head) - there are obviously very different 'conclusions' being reached in the Retirement Income Review Report and this ASFA article (not least about the level of Super capital remaining at death). So who's correct (or, at least, most accurate) given they can't both be ? Or can they both be correct ?! Perish the thought that there might be vested interests rearing their heads on either side of the debate ... the RIRR conclusions play nicely into the Lib's preference to not increase the Super guarantee and to get Super used more 'efficiently', ASFA's conclusions play nicely into the Super guarantee being increased which obviously benefits the members they support. Regardless of that comment - surely the facts should give a good indication of what should be done next (if anything should be done) but which set of facts are accurate ? I'm confused ....

Jeff Oughton
April 15, 2021

At the risk of the obvious...Retirement Income Review/ Hume et al focus on total private income v (underspending) spending during retirement and savings/wealth on death for bequests....and govt dissaving/ retirement support

Most spend private super...but 80% own a home..so oversaving during life and plenty for bequest....and everyone able to apply for govt super/aged pension subject to income/assets test (govt dissaving)

Oversavings by elderly means underspending and a lack of jobs for younger people

And giving with a cold hand to beneficiaries

Your choice - but I'd rather see giving with a warm hand during (my) life...and more jobs for younger people...earning higher wages

Aussie HIFIRE
April 15, 2021

It’s perhaps not that surprising that those who are older die with zero or not much super, they had less time in their working life when they were receiving contributions and also have been spending it down for longer. And working may have been less common for women for much of that period, or they ceased work at a much earlier age to look after children and the household resulting in lower balances for them. On top of that in order to maximise age pension and minimise the 15%-17% tax on the taxable component of their super people may well have done a cash out and recontribution to a younger spouse which means that one person ends up with no super and the other has all of it, although they do share it. Add in people selling down much of their assets to get into a nursing home and pay the RAD, and it’s not surprising that a lot of people don’t have much in the way of super at death.

But instead of focussing purely on super we should be looking at the total assets of retirees to get a full picture of their situation.

Kate
April 15, 2021

So why are the Liberals and Jane Hume making such a fuss about people not spending their super and learning to live on their capital?

Steve
April 15, 2021

Likewise Labors plans to remove franking credits would mean even more people run out earlier and end up on the age pension....

Jimmy
April 15, 2021

Hardly. This would only apply to those in SMSF's in pension phase, & generally not to pensioners in industry or retail funds. When you look at the average pension account balances in SMSF's, they're significantly higher than retail or industry funds, and most people will never run out of capital nor end up on the Age Pension. You sound like just another conservative who wants to keep your nose in the trough at the expense of other taxpayers.

Neil
April 18, 2021

Jimmy, clearly those franking credit dollars returned to industry funds dont just disappear. Of course they find their way into member accounts.

Neil
April 18, 2021

And again, Jimmy, to be entitled to make a comment like that you would not have ever submitted a tax return showing an excess of tax paid and expecting it to be refunded. A franking credit is little more than the tax receipt, or Group Certificate in the old days, showing the amount of tax already remitted to the ATO on one's behalf based on the amount received as profit or wages. To paraphrase what Simon Crean, Labor, said in 1999, when the Libs proposed finishing what Keating started, refunding the excess paid tax evidenced by the franking credit, "is fair and makes sense...of course we support it because it is Labor's policy". If it wasn't fair and sense, in 2019 Labor would not have been letting some continue to have their excess tax refunded. The tax is either paid by and attributable to the individual or it is not. This is not determined by whether one also receives a gov age pension, the date on which that pension started, what one, in the case of charities like the IPA, or the Future Fund, spend the cash on. This is how the system works and why it is designed the way it is.

 

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