Retirement savings at risk amid calls for urgent super reforms

The push for long-awaited financial advice reforms has taken on new urgency, with a Super Members Council (SMC) report revealing that a typical new retiree could miss out on as much as $136,000 — or $6,500 a year — throughout their retirement due to the sheer complexity of Australia’s retirement system.

According to the report, around 2.8 million Australians are now racing towards retirement over the next decade — a demographic wave that will see the number of people retiring each year double from 150,000 to 300,000.

At the same time, the collective nest egg held by Australians aged 65 is expected to almost double, climbing from roughly $750 billion to $1.5 trillion over the next ten years.

Yet despite this wealth, many retirees aren’t getting the most out of their super. The report found that around 700,000 Australians over 65 who are not working full-time still have their savings stuck in taxed super accounts — unnecessarily eating into their disposable income.

These findings highlight a clear need for simpler, smarter retirement pathways that help everyday Australians make the most of what they’ve worked hard to save.

To prepare for this wave of new retirees, the SMC is urging government and industry to act quickly with short-term reforms that make the system easier to navigate. These include:

• Expand access to simple, affordable financial advice and digital tools.
• Enable safe and effective data sharing with Government to enable funds to optimise incomes and offer retirement income dashboards to their members.
• Support Smart Retirement Pathways and suggest the best retirement income solution for them.
• Preserve flexibility and retiree choice.
• Fix issues that lead to dual super accounts for retirees.

Beyond these immediate changes, the Council has also outlined long-term reforms that could make a lasting difference:

• Simplifying a transition to tax-free income, including considering automatically removing tax from accounts at age 65 for eligible members.
• Rethinking minimum drawdown requirements for Australians with low super balances so poorer retirees can also access the benefits of moving into the tax-free retirement phase.
• Strengthening consumer protection by applying a quality filter on all retirement products.

“We need to make the shift into retirement so much simpler, easier and more intuitive for everyday Australians,” said Super Members Council CEO Misha Schubert. “This challenge is now incredibly urgent as almost 3 million Australians start to race towards retirement in coming years.”

“Moving to a system of simpler, smarter pathways into retirement would mean every Australian could retire with confidence, knowing they’re not missing out on money to pay the bills and enjoy life to the fullest.”

The renewed calls for financial advice reform come after the Australian Taxation Office (ATO) revealed there’s close to $19 billion in lost and unclaimed super, waiting to be claimed by over seven million people.

While there are plenty of reasons why someone might have lost superannuation floating around, ATO Deputy Commissioner Ben Kelly said finding and claiming it is quick and easy.

“Checking for lost or unclaimed super is like reaching into your pocket and finding a $50 note, it’s your money, you just didn’t know it was there,” Kelly said.

“Your super can become lost if your account is inactive, and your fund can’t contact you. If you’ve changed jobs, moved house or simply forgotten to update your details, you may have lost or unclaimed super.

“This super is not lost forever. The ATO wants to get this lost and unclaimed money back into your account.”

If you suspect some of your hard-earned super might be sitting in a forgotten account, the good news is it’s easy to track it down. Follow these simple steps to make sure every dollar of your retirement savings is working for you:

• Keep your details up to date: Make sure your current contact and bank details are updated with both your super fund and the ATO. This ensures you receive important updates and any payments that may be owed to you.
• Check if you have multiple super accounts: If you’ve had several jobs over the years, you might have more than one super account. Each can come with its own fees and insurance, so review what you have and decide what’s best for your circumstances.
• Consider consolidating your super: Combining your accounts can make your super easier to manage and may save you on fees. Just be sure to check for any insurance cover or benefits you could lose, and confirm which fund your employer currently pays into.

Retirement should be rewarding, not confusing. With the right reforms and a little proactive planning, every Australian can make sure their money works as hard for them as they did to earn it.

Read more: New superannuation rule set to deliver more money in retirement

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.