There is a mammoth demographic change now taking place in superannuation as waves of baby boomers near or enter retirement.
Rice Warner forecasts that the industry fund sector will be major beneficiaries as its share of superannuation retirement assets will multiply more than seven times over the next 15 years from just 2.5% to almost 19%.
We expect the number of retirement members in all superannuation fund sectors to more than double to 4.5 million over this period and the value of superannuation retirement assets to rise from $631 billion (as at June 2015) to $1.4 trillion (in 2015 dollars).This year alone, 250,000 new retirees will join the retirement ranks with some $35 billion in benefits.
The accelerating pace of the shift from the accumulation to the retirement phase will undoubtedly take some fund trustees by surprise. It is critical that funds understand the often-varied needs and circumstances of their mushrooming numbers of retired members, and ensure that appropriate retirement strategies are available.
Further, funds should make sure that the movement from the saving to the pension phase is as seamless as possible – particularly given that members are increasingly staying with the same fund into retirement.
Consider a few realities of the present super retirement system:
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