SMSFs still tend to view their fund as a nest egg and not as an income stream for retirement, but that view has started to shift in recent years, according to the SMSF Association.
Association chief executive John Maroney said the long-standing view that superannuation was a retirement nest egg was common in regards to SMSFs and this was evident in the underlying assets many held.
“Until recently, many of the simpler investment strategies had a high proportion of large, listed Australian equities paying franked dividends and term deposits, which gave a secure income flow that did not erode the capital,” Maroney said during a panel session at the Household Capital Three Pillars Forum today.
“That is much more difficult now with interest rates close to zero and there is a lot of focus on the tens of millions of dollars that are sitting in cash and term deposits for people in their 60s, 70s or 80s that makes less economic sense now than it did five or 10 years ago.”
He made the comments in response to a question regarding how SMSF members viewed their retirement savings and pointed out economic questions had played a role in changing views around the purpose of superannuation assets.
“People are looking at how they can adjust their investment strategies and part of that conversation is recognising the nest-egg concept, which might have worked well historically, is not the ideal way to optimise people’s futures if they want to make sure they live in dignity,” he said.
“Many people will move to the age pension at some stage of their retirement so this becomes a matter of optimising how they draw down on their capital in a way they feel comfortable. The shift is a journey that is still in progress, but we are closer to the start than the finish.”
