The Federal Treasurer, Wayne Swan (pictured), has been warned transition to retirement pensions are being inappropriately recommended to clients with insufficient income and inadequate superannuation balances.
The warning has come in the form of a letter from a Ballarat adviser, Tony White, who said that transition to retirement pensions were not appropriate for everyone and could be particularly inappropriate for the average Ballarat workers (earning $40,000 to $50,000) who were on his client list.
White said he had seen instances where clients were using the transition to retirement pensions to fund living expenses and pay down debts with no contributions made back into superannuation.
“Left as they are, these people will have severely depleted superannuation entitlements at retirement and the Government will be forced to fund their retirement years,” he said.
White said he did not blame the clients for entering into the transition to retirement pensions. Instead, he blamed the advisers who were representative of both private retail businesses and industry superannuation funds.
He said he believed the transition to retirement pension strategy was beneficial to those who had large amounts in their superannuation accounts (in excess of $500,000) and were receiving salaries of over $100,000.
White’s letter to the Treasurer said the transition to retirement pensions were not a strategy for the whole country, and unless changes were made to curb their use the Government was likely to see the negative effectives within five to 10 years.
