Kaye Fallick

Kaye is a retirement commentator and coach, with 25 years’ experience writing about retirement income. She has authored two books on life stage changes – Get a New Life and What Next? – and enjoys regular radio and podcast appearances. Her favourite mission is to offer plain English explanations of complex rules so that all retirees can benefit. She is based in Melbourne but enjoys escaping to Italy whenever possible.
How super is taxed: Are you paying too much?

How super is taxed: Are you paying too much?

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With the approach of the end of the financial year (EOFY) there’s a lot going on. Many retirees are watching and waiting to learn of any 1 July changes to deeming rates which have been frozen since July 2022. It’s anybody’s guess what will happen next, but higher deeming rates could mean the loss of Age Pension entitlements for those who have only just qualified with little margin to move on means testing.

One aspect of the EOFY that is often overlooked is tax rates on super. That’s because there is a common misconception that most retirees simply don’t pay tax. That’s not correct; many do. And how this form of tax is paid is really interesting. Read on to learn more about the ways that you are being taxed and if there is an easier way of reducing this impost. 

Tax on super depends upon many variables. There are the two major ones – whether your fund is in accumulation (saving) or decumulation (spending) mode. But there are other factors at play, including your contributions, your investments and the way that you withdraw your savings.

Retirement income certainty: Is this achievable?

Retirement income certainty: Is this achievable?

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And should you be ‘pushed’ into a retirement income product. Would that be in your best interests?

At the heart of most retirement wants lies the desire to have a strong degree of control, in the form of a secure, dependable retirement income. No surprises here. Volatility in financial markets such as that experienced during the GFC are recent memories of sudden losses that affected many retirees adversely. With the exception of the minority of retirees on a Defined Benefit Pension (DBP), the income of many older Australians remains strongly tied to the performance of financial markets, as that is where their superannuation is invested.

The Federal Government has recognised the concerns held by retirees and is expecting that super funds will engage more with their members, support their decision-making to achieve the best retirement income outcomes possible. This, in a nutshell, is what the Retirement Income covenant (a recommendation by the 2020 Retirement Income Review) requires. But the regulators believe the funds are too slow in their support of members. A recent Consultation Paper has included a template for a ‘generic ‘Lifetime Income Stream’ as an example of a product funds could offer members so that members could achieve more predictable income more simply.

The language around this offering is that super funds need to do more to ‘nudge’ members towards such a form of retirement income. It includes suggestions that members be defaulted into such a product, meaning if they do nothing else their super would be moved to a government approved Lifetime Income Stream. Defaults can be ‘hard’ – meaning forceful – or ‘soft’ meaning they are a last base action in the absence of any other activity by the member.

Peak retirement age: How long would you want to work?

Peak retirement age: How long would you want to work?

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More older Australians are staying in work for longer, creating a new ‘peak’ retirement age, according to a new KPMG report.

Analysis by KPMG Urban Economist, Terry Rawnsley, suggests that Australian workers are retiring at their oldest age since the 1970s. This higher expected retirement age has remained unchanged over the past two years, which suggests a major shift since the Covid pandemic.

The expected retirement age for men is now 66.2 (highest since 1972).

The expected retirement age for women is now 64.8 (highest since 1971).

Drivers for these changes are increased flexibility in what Rawnsley calls ‘knowledge intensive’ roles, also the increase in working from home which has allowed many older Australians to ‘semi-retire’ or work from home or a holiday location.

Whilst it seems that older workers ‘filled gaps’ during the Covid years, the labour market has since tightened with the return of international migration and growth in the under-55 labour force.

More women are also working full-time with the expected age of retirement from full-time work increasing by 12 months. Somewhat conversely, the later age of retirement for men is seen to have been encouraged by increases in part-time retirement. Rawnsley noted, however, that:

“Even in a tight labour market, we may have reached a plateau in the expected age of retirement, suggesting we cannot expect older workers to continue working longer. This is because we simply can’t find enough older workers to sustain the growth that occurred during the COVID-19 era.”