The Commonwealth Treasury wants encouragement for retirees to spend all their superannuation before they die.
They suggest superannuation trustees need to develop strategies to encourage people to draw down their full super balances in retirement.
“Partly because they have only ever been primed to save as large a lump sum as possible, retirees struggle with the concept that superannuation is to be consumed to fund their retirement,” wrote Treasury.
By 2060, one in every three dollars paid out of the superannuation system will be an inheritance rather than retirement income, according to the Government’s Retirement Income Review.
Is it such an issue?
Australian Tax Office data shows “around 1.7 million Australians aged 70 and over have no superannuation or, in other words, over 60% of those aged 70 and over have no super.”
The Morrison Government committed in the 2018 Budget to introduce a retirement income covenant for superannuation trustees. The covenant would be added to the Superannuation Industry (Supervision) Act 1993 and is meant to be in place next year – from July 1, 2022.
Treasury wants superannuation trustees to devise strategies to make those with super spend it all.