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<\/p>\nJust to be clear: your account-based pension is not the same as the age pension, which is not the same as the transition-to-retirement income stream, or your retirement income stream, and none of those are what\u2019s actually written on the form you\u2019re now trying to fill out while muttering \u201cjust give me my bloody money\u201d.<\/p>\n
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When you dig a little deeper, there are actually two problems \u2013 and they\u2019ve both been highlighted in a new report shared with me by the Conexus Institute called Account-based pensions: Limited drawdown options, but no limits on terminology.<\/p>\n
Yes, it\u2019s written for the retirement industry. But I thought you\u2019d appreciate the laugh \u2013 because let\u2019s be honest, you\u2019re the one who ends up copping the confusion. And I know from your cries for help that this stuff is real.<\/p>\n
They pulled out the retirement income application forms for 20 of the biggest funds and analysed them. The first problem? There\u2019s no common language. The second? Even when you figure out what they\u2019re trying to say, the form still doesn\u2019t let you do what the advice tool said you could.<\/p>\n
And the third? Super funds tell you that you can take out more than the minimum, then their forms make it hard and confusing and look like the minimum amount is the sensible option.<\/p>\n
From calculation to confusion<\/p>\n
For most people, the road to retirement income really shouldn\u2019t be this hard. Maybe you\u2019ve just sat down with someone from your fund, or used one of their free online tools.<\/p>\n
Either way, it all starts off looking pretty straightforward. They show you a gorgeous little graph, some shaded layers of income stacking up to give you a \u201ccomfortable\u201d retirement.<\/p>\n
The age pension is estimated for you down the bottom, your super income sits neatly on top, and if you\u2019re lucky, there\u2019s a cherry layer called \u201cother income streams\u201d. It\u2019s basically a money layer cake. <\/p>\n
This is where the fund helpfully suggests you draw a bit from your account-based pension (ABP) each year to top up the age pension. You nod. Seems reasonable. Looks easy. You can see the amount increasing over time. You can do this retirement thing!<\/p>\n
A few days later, you click \u201cGet Started\u201d on the email that came from the advice session or the calculator. And that\u2019s when it all goes sideways. You\u2019re in a form that suddenly speaks a different language. Not the one used in the dashboard. Not the one used in the advice session. Definitely not plain English.<\/p>\n
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The whole system has been set up like a badly translated board game.Credit: Jessica Hromas<\/p>\n
Most funds give you just two options: take the minimum amount the government says you must draw, or pick a fixed dollar amount to withdraw regularly. That\u2019s it.<\/p>\n
No third option that says \u201cjust do what the advice tool said\u201d; no helpful button that says \u201ctop me up to hit my retirement income goal\u201d.<\/p>\n
There\u2019s no explanation of how to calculate it. No reminder of the 6 per cent the adviser told you would work well for you and still see you with enough to fund your aged care later in life. No mention of how this ties back to your age pension.<\/p>\n
Just two boxes \u2013 and good luck, because that\u2019s your retirement income now.<\/p>\n
Want to change it next year when your age pension shifts? Does that happen automatically? Do you need to update it manually? Should you call someone? Is this the bit where you book a second advice appointment? It\u2019s all suddenly looking a bit hard. Hard enough to delay the whole thing.<\/p>\n
Conexus says that only nine funds even let you increase the amount you draw each year in line with inflation \u2013 because apparently keeping up with the cost of living is optional now and completely in your hands to decide on.<\/p>\n
And just three funds offer an automatic drawdown option that adjusts over time. So the \u201cplan\u201d you saw? You have to implement it yourself, one guess at a time.<\/p>\n
You\u2019d think that, by now, someone would\u2019ve made this easy. A big \u201cset-and-forget\u201d button. Or at least a \u201cwe\u2019ll do the maths for you\u201d tool. But not yet \u2013 even with 4.2 million people in retirement and 5 million more on the way \u2013 this hasn\u2019t been a priority.<\/p>\n
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And if you\u2019re approaching retirement for the first time, you have to work this out while trying to remember whether your account is called an income stream, a pension account or a retirement smoothie.<\/p>\n
It\u2019s not you. It\u2019s the system.<\/p>\n
The more you look into it, the more you realise: it\u2019s not your fault that you\u2019re confused. The whole thing\u2019s been set up like a badly translated board game.<\/p>\n
Even the experts who study this stuff are saying: the options are limited, the naming is inconsistent, and it\u2019s too hard for regular people to turn their savings into income.<\/p>\n
So if you\u2019ve opened a form, stared at the page, and thought \u201cwhat am I reading?\u201d … you\u2019re not alone. In fact, you\u2019re the norm.<\/p>\n
What we need is a superannuation dictionary for retirement. All the funds, all the government departments and all the advisers need to be locked in a room until they agree on three things:<\/p>\n
what to call retirement accounts,what the options to draw down actually mean, andhow to make the form match the language used when you talk to someone about their plan.<\/p>\n
Because right now, retirement income is being delivered like IKEA furniture \u2013 only the instructions are in five languages, none of them yours, and one of the legs is mislabelled. Real people shouldn\u2019t have to decode jargon just to get their own money out.<\/p>\n
If you\u2019re now sitting there wondering whether you\u2019re the only one who can\u2019t make sense of the paperwork: you\u2019re not. It\u2019s difficult to navigate the retirement process in superannuation at present. Here\u2019s hoping someone in a blazer in the financial regulator or superannuation industry association is listening.<\/p>\n
Until then? Make yourself a cuppa and sit in the hold queue for their general advice line, again. Truly, don\u2019t be afraid to ring your fund and say, \u201cCan you please explain this in normal person language?\u201d Tell them I sent you.<\/p>\n
Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife<\/a>. She writes a weekly newsletter at epicretirement.net<\/a> and hosts the Prime Time<\/a> podcast.<\/p>\n Advice given in this article is general in nature and is not intended to influence readers\u2019 decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.<\/p>\n