A recent study has shown that retirees are drawing down minuscule annual amounts on their superannuation, dispelling the myth that they are frivolous with their savings. ‘How Australia Saves’ – a joint paper between Vanguard and Sunsuper – revealed that rather than retirees rapidly spending their super savings and relying on the aged pension for the remainder of their income, those surveyed for the report were drawing down their assets at a median rate of 6 per cent a year. Vanguard senior manager of superannuation policy Paul Murphy said the results dispelled the idea that retirees had a preference for using their super as a lump sum or withdrawing large amounts annually. “This is consistent with recent research into pensioner drawdown behaviour and contrary to the notion that self-funded retirees are inclined to deplete their superannuation quickly in order to ‘double dip’ into the age pension,” Murphy said. In a recent blogpost around the report, Vanguard principal of market strategy and communications Robin Bowerman said the idea that the majority of retirees were spending their super all at once was misguided. “It appears that the myth is based, in part, on a misinterpretation of government statistics of how fund members receive their super benefits upon retirement,” he said. The report analysed the transactions and investment experiences of Sunsuper members, including the small proportion currently in retirement. It revealed that the small number of fund members who withdrew most or all of their super had extremely low balances. The median drawdown of such members in 2015-16 was $10,000, representing 86 per cent of their super balances. The small percentage of Sunsuper members receiving a retirement pension reflected its young member base being an average of 36 years old, but another 210,000 members were estimated to move into the pension phase over the next decade. This meant more detailed insights around drawdown habits were likely to appear in subsequent reports, according to Murphy.
10 July 2017