Super funds are paying out millions of dollars in retirement “bonuses”. But what are they, and does your fund offer one?
Australians entering retirement could lose thousands of dollars by failing to check if their superannuation fund offers a retirement “bonus”, as industry and retail funds quietly launch incentives to help them compete with self-managed super funds by mimicking their tax advantages.
And while the products are marketed as refunds of tax that had been set aside to pay potential capital gains liabilities financial advisers and super fund executives are split over the fairest way to calculate the bonuses. Most funds do have some form of clawback provision, which means members lose the bonus if they move out of the fund within a given period. Other funds require you to have been with them for a certain amount of time – also typically a year – to be eligible for a bonus.AustralianSuper paid out $13 million in “retirement boosters” in the 2023 financial year to 7700 eligible customers.
“I know of a case where a husband and wife made a profit of $1.3 million on an initial investment of $200,000 in one security,” he says.“The fund had 80 per cent in pension accounts, so the CGT was 20 per cent of 10 per cent. That is 2 per cent of the gain. When they retire, Terry’s $350,000 balance triggers a retirement bonus of $3500, reflecting the approximate 1 per cent of his balance that had been held aside to pay future – but ultimately unnecessary – capital gains tax.
REST says its bonus is a way to provide “greater equity” and give more cash to people who are likely to be retiring with less than the national average.AustralianSuper calculates its bonuses for each individual based on the purchase and sale of assets throughout the life of the account. A more general approach involves allocating bonuses based on a flat rate percentage of the balance being transferred to pension mode.
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