Encourage income streams, say accountants

The Government should move to implement policies which make pension and annuity products more attractive and accessible as a means of reducing the degree to which Australians take superannuation lump sums, according to the Institute of Chartered Accountants in Australia (ICAA). 

In a white paper suggesting future policy directions for any newly elected Government, the ICAA said it supported discouraging people from unduly accessing superannuation lump sums - but urged against an overly prescriptive approach. 

“Proposals have been put forward to address this issue, including amendments to how Australians are able to withdraw their savings from the super system by limiting the amount an individual is able to withdraw as a lump sum,” it said. “Being overly prescriptive may have a significantly detrimental impact on the system because it would have the potential to act as a disincentive to people voluntarily participating in the super system.” 

The white paper argued that the development of “attractive and accessible pension and annuity products, greater levels of consumer education, and tax incentives to promote the use of pensions is a better approach”. 

A Super Review/CommInsure  thought-leadership breakfast earlier this week concluded that more needed to be done to limit access to lump sums and encourage people towards income streams. 

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