Concerns grow over lack of action on retiree super tax benefits

Concerns have mounted over the number of older Australians who are eligible to switch their super to a retirement-phase account to reap tax and cashflow benefits but haven’t yet, according to newly-released data from the Australian Prudential Regulation Authority (APRA).

Commentary from retirement income provider, Challenger, said the latest release of annual superannuation statistics from APRA revealed there was over $302 billion in retirement savings in 1.5 million accounts still in the tax-paying phase of superannuation despite belonging to people over the age of 65, as at June 2024.

Aaron Minney, Head of Retirement Income at Challenger, said the statistics showed the number of accounts still in this phase but eligible to move to pension phase had risen by 120,000 year-on-year, holding $47 billion in super.

“Many older Australians are still missing out on the tax and cashflow benefits of the retirement phase of superannuation.

“While there has been progress with 219,000 new (retirement) pension accounts, one-third of people approaching or in retirement are still missing out. Over 625,000 accounts took a lump-sum in retirement (some might also have a pension) highlighting that the focus is still on the balance and not the income that people need in retirement.

“Some of the 1.5 million accounts are necessary for those with more than $1.9m in super or still working and receiving contributions, the majority belong to people who are missing out of the benefits of superannuation’s retirement phase.”

These comments follow in a similar vein to other recent comments made by the Super Members Council (SMC) in response to consumer research that found 700,000 Australians over the age of 65 and not working full-time still have their super in an accumulation account, accounting for approximately $90 billion, and are paying on average an extra $650 per year in taxes.

The SMC also called for the Federal Government’s Delivering Better Financial Outcomes (DBFO) package to address these concerns through provision of more simple and affordable financial advice that would bridge the retirement information knowledge gap among Australians of all ages.

“These statistics make it clear: more needs to be done to ensure retirees can access the full benefits of their super in retirement. As an industry we must do more for Australians in retirement including better retirement income options and guidance and advice for members,” Minney said.

“The government must act now to complete the raft of retirement reforms underway including the Delivering Better Financial Outcomes program to ensure Australians get the full benefits of their super in retirement. Without action to complete the task at hand, too many retirees will continue to miss out on the financial security they deserve.”