The federal government needs to encourage retirees to use their superannuation as an income stream rather than a lump sum withdrawal, industry experts say.
the government runs the risk of being forced to further subsidise retirement income if it doesn't provide better options, the Centre of Excellence in Population Ageing Research has said in a submission to the government's financial system inquiry.
"The absence of options to access superannuation savings as gradual income forces the lump-sum culture on people who may not want it," CEPAR director Professor John Piggott said.
"We know people who retire early may not have as much money as they anticipated. When the lump-sum runs out, they revert to the pension system or try to re-enter the workforce."
There is growing speculation that changes to the pension system will be included in the upcoming federal budget, as part of measures to reduce spending.
CEPAR said there needs to be a focus on financial planning for retirees, with the population aged 65 and over expected to reach 7.2 million by 2050.
Superannuation would serve a greater purpose as an ongoing income stream, its inquiry submission said.
It is likely that drawing on a lump sum has become an attitude adopted by retirees as a result of tax benefit incentives, CEPAR said.
Changes to policies and regulations could help to develop "an income mentality", it said.
Mercer retirement business leader Guy Thorburn said the industry needed to help people understand the income-producing capability of their superannuation.
"We need to be helping and encouraging people to use their superannuation to generate an income through retirement," he said.
"We should make sure as an industry that we come up with products that make it attractive for people to maintain their benefits as an income rather than take it out as a lump sum."
