Almost half of super pensions only drawn down at minimum levels

Nest egg, superannuaiton, SMSF, retirement
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superannuation pensions, drawn down minimum levelsAlmost half of people with superannuation pensions are only drawing down at the minimum levels, according to research by the Actuaries Institute and CSIRO, but a significant portion of people are on track to exhaust their superannuation balances early.

49.97% of people with superannuation pensions in non-industry super funds are only drawing down on their pensions at the minimum level. 49.00% of people in industry super funds with pensions are drawing down at the minimum level.

“Contrary to some views that retirees quickly run down their super balances and then rely wholly on the Age Pension, the reality is that at least half of the pensioners take a very financially conservative approach in retirement,” said Anthony Asher, convenor of the Actuaries Institute Retirement Income Working Group.

However the research also indicates that an increasing number of retirees will completely run down their superannuation balances.

“The data confirms research from other sources that a significant minority of retirees have, in recent years, run out of retirement savings before death. The next step is to understand why. It could be intentional and a natural step as their income needs decline, such that the Age Pension is sufficient at older ages. On the other hand, they may have lost money due to dementia, financial abuse of some kind, or poor decision making,” said Dr Asher.

11.08% of people with pensions in non-industry funds are drawing down at more than 10% of their account balance. 16.70% of people in industry funds are drawing down at over 10%, including 2.6% of people aged under 65 drawing down at more than 24%. These figures exclude people aged 90 or older – when the minimum pension drawdown percentage exceeds 10%. However these figures would also be distorted by the 10% draw down limit on Transition to Retirement pensions.

“For those between 75 and 79, the percentage of members taking over 10% is much higher. For industry funds, it is 15%; for other funds it is 20%, and this rises to 30% for those over 80. Life expectancy at 80 is about 9 years for males and 10 for females, but many people live longer. Actuarial calculations are that between 20% and 30% of this group would outlive their superannuation – if they do not reduce their drawings significantly,” said the Actuaries Institute.

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1 comment

  1. The stats cited don’t give a complete picture unless we know if the observations were about those with more than the minimum threshold in Assets to be denied the full pension or not.

    It could be good advice to bleed your Super balance down to but not under the minimum asset limit which then maximises your Aged Pension Payment supplemented by a maximum return from you Super balance.

    One would only cautiously withdraw down amounts from Super if your Super balance was less than the minimum threshold in assets.

    Wally, any observations on these claims????

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