Breaking Australia's love affair with the lump sumBY JAMES FERNYHOUGH | MONDAY, 29 JUL 2013 11:55AMAs the population ages, Australians will have to move away from lump sum super payments and towards income streams, a trend that will demand bold policy changes |
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What a load of rubbish by Pauline Vamos! The general population has had enough of Government interfering with superannuation and we don't want ASFA advocating more changes which will obviously benefit the super funds by trying to keep money in super and therefore contribute to their own bottom line.
With greater longevity than ever before, the consumption curve in the post retirement can seldom be smooth if the limpsums supersede the draw down. The biggest dent to pension is Inflation and unless the draw down is indexed, it makes very little sense to have the same. While one survives 25 years in retirement, the lumpsum would certainly not last, nor would the draw down at a 20 years old rate and hence the indexation is a must.
Everyone prefers to have 'a bird in hand rather than in bushes' and hence with no guarantee of indexed draw down and also of survival prefer the lump. Nevertheless, times have changed and with higher life expectancy at 60 for the current generation, the question is not longevity but 'Healthy Longevity' as most of the old age expenditure goes medical.