The chart below captures quarterly data on benefit payments made either as lump sums or pensions since late 2004.

The data reveals that benefits taken as lump sums have at all times exceeded those converted into a superannuation pension (allocated pension, account-based pension or other income stream product).

In aggregate, some $746 billion has been withdrawn from super as lump sums over the period, while for pension products that amount was around $600 billion. The large spike in lump sum benefits in 2020 reflects the operation of the Early Release Scheme that allowed eligible individuals to access up to $20,000 of their super during the height of the COVID disruption.

At present the ratio of lump sum benefits to pensions across all APRA-regulated super funds is approximately 55:45.

What follows has fascinating similarities to issues on pensions in the UK.

In the UK we are obsessed by “adequacy” but we haven’t given much thinking to the issues under discussion by those advising Australian “Supers”.

Professor Asher is interesting in assuming that people in decumulation are investing as if they were accumulating. He uses the assumption to verify in his head that people in Australia are not yet moving to pensions as the default, they are taking money in lumps – presumably to tide them over but Jim Hennington thinks it may also be for tax reasons.

The final comment by Harry Chemay is interesting for the UK. The behaviour of wealthy Brits may change when it comes to their retirement savings and they may resemble Homo Economicus very soon. If 40% of the pension pot would go to the tax-man then people may start thinking of funding their retirement lifestyles from pensions and consider the lifetime insurance of a pension or an annuity , a useful way to make the later years a little easier to consider- financially. “Financially” is important to  Homo Economicus.