The Productivity Commission’s report on superannuation policy for post-retirement importantly highlights that retirees are prudent, preferring to draw down their savings instead of relying on the age pension.
The SMSF Association CEO/Managing Director Andrea Slattery says: “This finding by the Commission confirms what the Association has always believed – give people an opportunity to build retirement savings and they will use them appropriately to fund their retirement.
“Certainly this has been an important feature in the success of the SMSF sector, where 93 per cent of retirement benefits are drawn down in the form of an income stream and not taken as a lump sum.”
Slattery says the report is another important contribution to the debate around Australia’s retirement income policy structures, providing important insights into how the system can be improved.
“But the Association is wary of some aspects of the report. The PC’s suggestion that an increased preservation age could lead to benefits of increased retirement savings balances and savings to Government revenue must be heeded with caution.
“Increasing the preservation age is a complex policy option that can impact those that are unable to work past 60 due to illness or physical issues or are retrenched late in their careers. They may be forced to rely on social security, so sufficient flexibility should be maintained for them to access their superannuation savings when appropriate.
“Ultimately, significant changes to superannuation policy in the post-retirement phase should be considered in the context of the broader retirement income system encapsulating social security, superannuation and tax policy.
“We are pleased that the PC recognises this with their suggestion that policy changes should be considered in a broader review of retirement incomes policy,” she says.
Source: SMSF Association
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