Summary: Around half of all superannuation is taken out as lump sums. Although this can have some advantages, such as paying off a mortgage when interest rates are high, savers will miss out on the benefits of pension streams. Super pensions are tax-free income streams and don’t have to pay tax on capital gains. This is more attractive than investing outside of super, where returns will be taxed.
Key take-out: The benefits of leaving money in super at retirement and starting a pension stream include zero tax and potential growth.
Key beneficiaries: SMSF trustees and superannuation accountholders. Category: Superannuation.