Superannuation accounts worth $225 billion have not been switched to their pension phase despite their owners reaching age 65 and becoming eligible for tax-free benefits.
“Many people are left in the accumulation phase paying unnecessary taxes simply because they are not aware of the options available to enjoy a tax-free income in retirement,” said Aaron Minney, the head of retirement income research at Challenger.
“In accumulation you pay 15 per cent tax and in retirement you pay zero, so people are working against themselves,” Australian Retirement Trust chief executive Bernard Reilly said.Mr Reilly said there might be a number of reasons that people over 65 had not started a tax-free pension, the most obvious being they were still working. The latest figures show the average age of retirement has increased from 53.5 to 64.3 over the past 20 years.
The government-funded age care pension was the main income source for 4.1 million retirees in 2020-21, according to Australian Bureau of Statistics figures released on Tuesday.
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