You can’t trust the government with your Superannuation.
“The country’s major superannuation funds would guarantee an annual income for millions of retirees under a confidential proposal from the Albanese government as it prepares for a flurry of withdrawals from the super system.
While the pension pool has swelled to $4.1 trillion, the federal government and funds are increasingly assessing how to manage an inflection point when more money flows out of savings as a larger proportion of the population reaches retirement age and life expectancy grows.
In preparation, Treasury officials have circulated proposed standards to superannuation funds and industry bodies that would enshrine so-called longevity protection. This tool would set a draw-down rate for retirees with more than $200,000 in their account and would be difficult to change even if a person wanted to do so.”
See article below 👇
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“I think it is important that people have that choice and I agree people may want to take some of their super to retire debt and I also agree…………….that home ownership is a very important feature of people’s circumstances post retirement………………we are a bit concerned people aren’t being given the choices they possibly should be around retirement products.”
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This was always going to happen with Superannuation – withdrawals from a decade onwards will start to exceed contributions. Especially since the percentage of people retiring with a mortgage is approaching 50% of retirees due to high housing costs.
Increasing withdrawals will cause a liquidity crunch forcing assets sales and a subsequent fall in asset prices that will impact future generations.
The language used by the Head of Treasury in my opinion is code for saying he agrees with me that superannuation is not working.
His emphasis on the word choice in relation to housing suggests he knows very well that superannuation is stopping people from owning their own home.
It’s time the major parties stopped pretending that superannuation is anything but a rort, and allowed people to keep their wages.
Home Ownership is the most important financial investment a person can make.
It’s why voluntary superannuation is one of People Firsts key policies.
Quote from:
https://www.afr.com/companies/financial-services/secret-treasury-briefings-reveal-future-of-pension-savings-20250213-p5lbyo#:~:text=The%20country’s%20major%20superannuation%20funds,withdrawals%20from%20the%20super%20system
Committee on 26/02/2025
Economics Legislation Committee
26/02/2025
Estimates
TREASURY PORTFOLIO
Department of the Treasury
Senator RENNICK: I’d like to raise a question about superannuation and the ability to deal with this inflection point. There was an article on the weekend in the Australian Financial Review which said that secret Treasury briefings reveal the future of pension savings and the fact that there may be limitations placed on the amount of money that people can withdraw from their superannuation in retirement. That concerns me greatly. Firstly, it’s a free country. We should be able to access our own money when we want it. The other issue is that we’ve got an increasing percentage of retirees who are actually retiring with a mortgage. That’s increased, according to the ABS, from 10 per cent in 1992 to approximately 40 per cent today and still increasing. My concern is that people will be unable to access their superannuation to pay off their mortgage and then go on the pension. It’s a point of view, but to me owning your own home in retirement if not throughout your working career is of utmost importance. Could you perhaps comment on that article—I’m not sure if you’ve read it—about briefings on dealing with this inflection point in super where withdrawals will start to exceed contributions?
Dr Kennedy: I don’t disagree with anything you just said. I think it is important that people have that choice. I agree that people may want to take some of their super to retire debt. In Mike Callaghan’s review of the superannuation system a little while ago now home ownership was a very important feature of people’s circumstances post retirement. I think the thing that we’ve engaged the government on that we’ve been a bit concerned about is that, to be straightforward, we’ve been a bit concerned that people aren’t being given the choices they possibly should be around retirement products, and that the superannuation industry—maybe this is a bit unfair—has tended to focus more on accumulation than offering on the services and products they need to offer people in the retirement phase. I’ll just say I personally—it would be a matter for government for subsequent policy—haven’t heard anything different. I think we have to be very careful about any form of removing choice. It’s not on my list, but I do wonder—and it’s an area Senator Bragg also knows very well—whether this is an area where at least some nudging is required to see people offered products. We all know this from family and friends. Managing your retirement savings requires key decisions. It will require decisions across the latter decades of your life. We’re just really testing the hypothesis as to whether people feel confident to access that money they’ve put aside, because of the longevity risk. They’re concerned about having enough money throughout their retirement. I just thought I’d give you some assurance that at least from our perspective it’s not about taking away choice, it’s more about whether people are being offered enough choice.
Senator RENNICK: The other issue I have is that, once those withdrawals start to exceed contributions, we’re going to have issues with the markets because suddenly super funds are going to start having liquidity issues and cashing in some of their assets. That may not be until the late 2030s, but I’m glad you’re looking at it because I’ve always thought that sooner or later this thing is going to tilt the other way.
