Titled "The Retirement Revolution: Simpler, Smarter Retirement," this comprehensive report—the first extensive analysis since the 2020 government retirement income review—highlights the existing retirement system's complexity. Such intricacies hinder Australians from transitioning smoothly into retirement.
A significant concern identified is that approximately 700,000 Australians over 65, despite not working full-time, retain super in taxed savings-phase accounts, effectively reducing their disposable retirement income.
In light of these findings, the SMC recommends immediate reforms, emphasising the need for expanded access to straightforward and affordable financial advice, including leveraging digital tools.
Further, they propose empowering superannuation funds to collaborate with the government for income optimisation, offering retirement income dashboards to members, and supporting pathways that secure optimal retirement income solutions.
The SMC also calls for maintaining flexibility in retiree choices and addressing the problems arising from dual super accounts. Long-term recommendations include considering a tax-free income transition and potentially eliminating taxes on suitable accounts at age 65. A reevaluation of minimum drawdown requirements is suggested to benefit retirees with lower super balances.
The report further overturns the misconception that Australian retirees generally underspend their super, illustrating that most drawdowns exceed the required minimum. By 2024-25, about 64% of tax-free retirement account holders are anticipated to withdraw above these minimums, with the percentage higher for those having super balances under $50,000.
SMC CEO Misha Schubert elaborates on the need for more intuitive and simplified retirement pathways, emphasising the urgency as millions gear up for retirement and that transitioning to a system that offers simpler, smarter retirement solutions will empower every Australian to retire confidently, ensuring they have enough to cover bills and enjoy life to the fullest.
