Govt warned on super lump sum myth
The Federal Government has been warned against predicating its Budget changes to superannuation on the belief that most Australians seek to take their superannuation as a lump sum.
Actuarial research house 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.
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