Superannuation drawdown behaviour – profligate or frugal?

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In August, ACFS hosted a boardroom briefing from CSIRO’s Dr Andrew Reeson who presented research on how retirees withdraw income from their superannuation account-based pensions.

Australian retirees have a large amount of flexibility over how they withdraw savings from their superannuation accounts in retirement, and some commentary has suggested retirees spend these savings early in retirement, before falling back on the Age Pension.

Dr Reeson analysed Australian Taxation Office (ATO) data on superannuation account balances from 2003 to 2014. This dataset included people with APRA and self-managed superannuation accounts, and showed their superannuation contributions and withdrawals, as well as investment earnings over the period.

Dr Reeson’s research suggests most retirees generally make modest withdrawals from their superannuation, close to the mandated minimum withdrawal rates. The result is that superannuation balances tended to grow (in nominal terms) over the study period for people aged in their 60s and 70s.

Some groups made higher withdrawals – on average men had higher withdrawal levels than women, people with lower superannuation balances tended to withdraw a greater proportion of their accounts each year, and withdrawals were slightly higher in years with strong investment returns.

The briefing concluded with a discussion of why withdrawal rates are lower than expected. Participants noted that Australian retirees have far more responsibility for their own financial decisions, than those in other countries, and may struggle with these complex decisions. With little instruction about how to best manage their account-based pensions, many retirees appear to use the minimum withdrawal rates as a guide. Further, many seem to be preserving their savings in an attempt to manage longevity risk and protect against future health costs – there may be a need for financial products which better manage these risks, and give retirees more confidence to withdraw income from their superannuation. Finally, superannuation is seen as a savings tool and retirees may be uncomfortable with depleting these savings. Changing the language around superannuation – referring to it as a source of retirement income, not saving – may reduce this issue.


This research was produced by the CSIRO-Monash Superannuation Research Cluster a collaboration between the CSIRO and Monash University, the University of Western Australia, Griffith University and the University of Warwick in the United Kingdom. In addition, the Cluster engages on an ongoing basis with a range of industry supporters, government agencies and industry peak bodies who assist in providing guidance and feedback to researchers, providing data, and in disseminating outcomes. The purpose of the Super Research Cluster is to examine issues pertaining to the future of Australia’s superannuation and retirement systems.