Senator urges retirees to use their savings ‘more efficiently’

Superannuation minister Jane Hume wants Australians to be more engaged with their super and to use their savings “more efficiently” when they enter retirement.

Senator Hume believes the super system’s bones are “solid and stable” but less than perfect.

“The complexity of the system and the lack of simple, clear and independent information is holding Australians back from finding the best product for their circumstances,” she told the financial services industry in an event hosted by Pritchard Partners.

Senator Hume also says retirement savings should be used in a better way, adding that Australians are retiring richer than ever yet live extraordinarily frugal lives in retirement.

“The challenge for policymakers is to help retirees use their savings more efficiently and enjoy a much better standard of living,” she said.

She said more retirees should draw down on their super capital instead of living only off investment returns and passing away with most of their retirement savings intact.

The senator also claimed that COVID-19 led to more consumer engagement with super which, in turn, forced many to reassess their finances.

“The early release of superannuation was a lifeline for Australians that got them through to the other side of the worst of the economic consequences of the pandemic,” she said.

A raft of government super reforms aimed at improving systems and protecting members’ best outcomes would be rolled out this year, the senator announced.

The reforms would put underperforming funds on notice, she said. The government’s Your Future, Your Super reform would require funds that fail an annual quality test to inform members of underperformance and prevent them from taking on new members until their issues are fixed.

“Of all our reforms, this is a welcome outcome. There is a proliferation of funds and some of them remain hidden in the shadow of the good performers,” said Senator Hume.

Other reforms should see an end to unnecessary super and insurance products, the strengthening of anti-hawking provisions, and a stronger line on deducting advice fees from super accounts.

“We have legislation before Parliament that, as of 1 July 2021, we now have fees for one-off financial advice which can only be deducted out of MySuper accounts, increasing the visibility of advice fees for members and improving transparency,” said Senator Hume.

“These have capped fees along with data matching technology within the ATO; to reunite lost, inactive accounts, low balance accounts with their rightful owner.

“As of December 2020, reforms have resulted in the ATO reuniting and consolidating around $3.7 billion held in unattended multiple accounts, on behalf of 2 million people.”

Are you happy with your super fund? What do you think of the senator’s suggestions?

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Related articles:
https://www.yourlifechoices.com.au/news/super-changes-for-older-aussies
https://www.yourlifechoices.com.au/finance/superannuation/news-superannuation/call-for-low-income-earners-to-receive-a-5000-super-top-up
https://www.yourlifechoices.com.au/age-pension/governments-death-tax-talks-spark-calls-for-universal-basic-pension

Written by Leon Della Bosca

Publisher of YourLifeChoices – Australia's most-trusted and longest-running retirement website. A trusted voice on Australia's retirement landscape, including retirement income and planning, government entitlements, lifestyle and news and information relevant to Australians over 50. Leon has worked in publishing for more than 25 years and is also a travel writer and editor, graphic designer and photographer.

One Comment

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  1. It’s great to say we pensioners should use our savings more efficiently. If I was pulling a senator’s salary and had a government pension to look forward to, I might spend differently. However, with the way we aged pensioners are (miss) treated, I’ll do my own forecasting and budgeting and take no notice of politicians who have proven they can’t manage a budget or plan for the future. I won’t spend my savings down as I will probably need them to survive! Aged pensioners retire into a totally unprotected environment, where the government has taken away any security, we may have thought we had. I’ve worked out how much I need to live modestly, but if I have that much in a savings account, the government penalizes me. Who are they kidding? We are just an easy target for the politicians to take more money from to cover their incompetence.
    No, Ms. Hume, I won’t use my savings more efficiently to help the government reduce its costs; I’ll spend it as I need, where I need and live the retirement I deserve, not what some politician feels I should. I worked for my savings, paid tax on them, and will spend them to support me in a lifestyle I choose, not one that some politician thinks I should do because it suits some unrealistic model they have come up with.

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