Early super splurge puts pressure on pension

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Early super splurge puts pressure on pension

By Gabrielle Costa
The Age, May 9 2003

People are retiring early, spending their superannuation reserves quickly and then relying on the age pension, an Australian Senate committee has been told.

In a submission to the multi-party committee yesterday, the Financial Planning Association called on the Howard Government to introduce a new regime so people could not access their superannuation - as a lump sum - before they were eligible for the age pension.

At the moment, people can access their super at 55, causing what the association described as a "clustering of new retirees".

In its submission to the Senate Select Committee on Superannuation, the association says that access to lump-sum super payouts should be linked to pension eligibility age, either at today's 65 for men and 60 for woman, or more if it is increased.

"The benefit of this policy is that it steers people away from taking lump-sum payments at age 55, running down this form of savings and then at age 65 relying on the age pension for the main source of income," the submission says.

The association's manager of policy and government relations, Con Hristodoulidis, said people should still be able to access some of their super reserve, but as an income stream rather than a one-off payout.