News
28 February, 2025
Retirees paying extra super tax
Thousands of retirees are unnecessarily paying more tax due to a lack of basic advice on switching their super into the tax-free retirement phase.
The Super Members Council (SMC) found that around 700,000 Australians over 65 who aren’t working full-time still have their super in an accumulation (savings-phase) account, costing them an average of $650 in extra tax per year. Altogether, these accounts hold $90 billion.
A retiree with $100,000 in an accumulation account could pay up to $4,500 in extra super tax over their retirement, while someone with $200,000 could pay up to $9,000.
Many retirees fail to act due to disengagement or uncertainty. Research shows six in ten Australians with low balances (under $100,000) keep inactive accounts because they don’t know what to do.
Super Members Council CEO Misha Schubert said reforms under the federal government’s Delivering Better Financial Outcomes package are critical to ensuring retirees can access affordable, high-quality financial advice.
“Not knowing enough about super can lead to poor decisions, like leaving accounts inactive or withdrawing funds without proper planning,” Ms Schubert said. “Making simple information and advice available to more Australians is a big missing piece of the retirement puzzle.”
Only 17 per cent of Australians – and just 26 per cent of current retirees – have sought financial advice from their super fund. Research shows four in five Australians aged 45–54 need financial advice but cannot afford it.
The government has announced further details of its Delivering Better Financial Outcomes package but has yet to legislate the reforms. The package aims to help super funds offer personalised retirement guidance and introduce a new category of adviser to provide simple but high-quality advice on APRA regulated products.
