Self-managed super funds are truly leading the way in the growing trend for retiring super fund members to take their super benefits as a superannuation pension rather than a lump sum.
The current Superannuation Market Projections report, published this year by Rice Warner Actuaries, estimates that just 2 per cent of SMSF retirement benefits are currently taken as lump sums rather than pensions.
This is much, much lower than the estimated percentages of retirement dollars being taken as lump sums from commercial and not-for-profit funds.
In short, almost all SMSF retirement benefits are being received as pensions.
As recently discussed by Smart Investing in Debunking a super fable, one of the common myths about Australia’s super system is that most of the retirement benefits are taken as pensions.
Retirees are more likely to favour a super pension over a lump sum when their balances grow to more significant amounts and as the level of their financial understanding increases.
And as statistics gathered by the Australian Prudential Regulation Authority (APRA) and the tax office show, average balances in SMSFs are much higher than the averages for other types of super funds.
SMSF members, almost by definition, are typically closely involved with their super and should understand the attributions of the super throughout their working and retirement lives.
Therefore, the reality that retiring SMSF members lead the way in regard to taking a super pension over a lump sum is hardly surprising.
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Robin Bowerman is Head of Market Strategy and Communication, Vanguard Australia. As a renowned market commentator and editor Robin has spent more than two decades writing about all things investment. |
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