Retirees falling into two groups: the ‘haves’ and ‘have-nots’. Here’s why

Too many older Australians are missing out on valuable retirement income by failing to take advantage of key strategies. And research says members of APRA-regulated funds, as opposed to those with SMSFs are playing the price.

Research by Self-Managed Superannuation Fund (SMSF) administrator Class indicates that there are two groups of retirees: the ‘haves’ (those who are advised and who are more likely to be SMSF members) and the ‘have-nots’ (primarily members of funds regulated by the Australian Prudential Regulation Authority, APRA).

And while the government is demanding that APRA-regulated funds provide more assistance to pre-retirees and retirees, the question of their legal capacity to give ‘advice’ still looms large.

Couple that with the fact there is no ‘typical’ retirement and that it’s common for retirement plans to be upset by retrenchment, ill-health and caring duties. It’s plain to see that the complexities of planning and being up to speed with retirement income strategies can be, simply, too hard for many.

Where you may be missing out

The Class research found there were two key areas where members of APRA funds were missing out.

Only half of all APRA-regulated fund members aged 65 and over had taken advantage of rules that allow them to move funds into a tax-exempt retirement income product. Almost seven in every eight SMSF members (who are also the trustees of their funds) had made that move.

Figures from AustralianSuper back up this finding and show that about 140,000 members over the age of 65 have super in accumulation accounts and are therefore paying tax on those earnings.

Earnings in accumulation stage are taxed at 15 per cent, whereas those in pension mode are tax free.

A 65-year-old who has $400,000 in an accumulation account that is earning 4 per cent over a 12-month period pays 15 per cent, or $2400, in tax on the earnings. Someone with a balance of $800,000 pays $4800 in earnings tax. If those funds were in pension mode, no tax is payable.

Transition to Retirement

The second key strategy that too few older Australians are employing is the Transition to Retirement.

The TTR is available to fund members who meet qualifying criteria, and has a number of benefits. Professional Planner explains that it allows employees to set up an account-based pension while continuing to receive employer contributions to their super. Potentially, they could reinvest pension income as voluntary contributions, in effect turbo-charging their account balance.

Professional Planner believes the widespread failure to take advantage of the TTR is because most Aussies are either unaware of the rules or are not being advised on how to best use them.

The Class research indicates that those most in the dark tend to be members of APRA-regulated funds.

“An unadvised super fund member must know the strategy is even available in the first place, will need to be guided through how to set it up, and will need to know where to go to get that guidance or advice,” Professional Planner says. “Even if they know to ask for it, it’s not certain their fund can currently give them that advice.”

The task for APRA-regulated funds is to cut the number of ‘have-nots’ by revamping their structure and offering retirees and pre-retirees more guidance, in accordance with the government’s Retirement Income Covenant.

Are you happy or dissatisfied with the guidance you’re receiving from your super fund? Have your say in our Flash Poll asking what you want from your super fund.

Also read: Superannuation payout complaints soar

Janelle Ward
Janelle Ward
Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.


  1. When we married (53 years ago), it was our intention to save a nest egg to pass on to our children for them to spend, or pass on, as they wished. It seemed the ethical thing to do.

    We figured we could do this because it was OUR money, earned by US, accumulated by US, Invested by US, and worried over by US.

    It was not ‘taxpayers money’, ‘governments’ money’, charity money, or anybody else’s. It was OURS, our reason for living, working, planning, risking and scraping.
    We don’t want anybody else’s money. Just our own,….as promised!

    Now WE are told that it isn’t OUR money to do with as WE wish. We have to spend on ourselves. So our spent lives have no meaning!


    WE don’t need advice to spend someone else’s money

    • Sorry, but you may be misunderstanding Superannuation rules. Just as ‘Oils ain’t oils’ Super money comes in to flavours. When your cash is in the Accumulation Phase you DON’t have to withdraw a penny from it and yes, you can give that money to any person whilst you are living but in your death the Super Fund decides who gets the cash! But consider, interest earns in tne Accumulation Phase is TAXED at a flat 15%. You can avoid paying that 15% tax if you move the Cash out of the Accumulation Phase and move it into the Retirement Phase where you pay NO tax on that money. However, you must now take out a minimum prescribed amount from your Retirement Phase Super Account. In any case, at any stage, you can give that money away whilst yiu are alive and no one pays any tax. But upon your death your non-dependent children will pay a ‘death’ tax of 15% on any money in your Super Account, no matter what Super Phase the cash is in. No one is making you do anything, you elect which Phase you want to put your Super money. If you don’t need to spend any Super money then … why not give it away now and let your children not lose 15% on ‘their inherited money’.

  2. The glass I’d full/the glass is empty there be no difference. Both are mugs!

    The smart one have half a glass of Super!

    In rough round figures to make it simple to understand what I am in about claiming that Super, for some Is Fools Gold!

    OK, I save $900,000 in Super and give myself a Pat on the back, But I have given up a lot of spending money threw out my working life. My saved cash excludes me from any Aged Pension and other Pensioner Benefits. My income is about the same as the Aged Pensioner gets with no saved cash in Super. And when it comes to going to an Aged Care facility my ‘savings’ will evaporate to pay for my entry into Age care. The person with no savings, having spent any excess cash over their lifetime gets it all for Free,. A person with $900,000 in Super is really no better off than the Aged Oensionervwho has no savings. Do you sums to get the precise figures.

    But the smart person has just half of $900,000. Why so smart? They collect interest on the $450,000 … which is half of the person on $900,000 Plus they now claim the full Aged Pension and other benefits. Their income beats those with no savings and beats those with $900,000!

    And their cost to enter an Aged care facility is greatly reduced compared to the life time saver with $900,000 in Super.

    Moral of the story, save in Super up to the Maximum amount to claim the full Aged Pension. Excess cash you have above the Max Amount to claim the full Aged Pension …. Spend it up to have a good life style during your working life!

    Alternatively save as much as you like in Super but get rid of the cash above the Max Amountbto claim the full Aged Pension

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