Cbus, a prominent super fund with assets totaling $105 billion, recently made a significant move by abolishing the minimum requirements for opening an account-based pension. This change eliminates the previous barriers that members faced, such as needing a minimum balance to maintain their pension accounts.
Prior to this update that took effect on September 1, Cbus members had to meet certain criteria, including a minimum balance of $10,000 to initiate an account-based pension and maintain at least $2,000 to prevent the account from closure.
Comparative research conducted by The Conexus Institute in late 2024 revealed that while Cbus had relatively low application minimums, other funds like AustralianSuper and HESTA had significantly higher thresholds, such as $50,000. The institute suggested that these high minimums might be a reason why many Australians over 65 still retain accumulation accounts instead of transitioning to pension accounts.
The removal of minimum application requirements by Cbus is a step towards providing equal access to retirement products for all members, regardless of their balance. Cbus CEO, Kristian Fok, emphasized the importance of this change in promoting flexibility and fairness in retirement planning.
Fok also highlighted the need for legislative reforms that would allow retirees to contribute to their pension accounts and exempt low-balance members from minimum drawdown requirements. These changes aim to simplify the system and reduce financial burdens on retirees, particularly those in physically demanding occupations.
David Bell, Executive Director of The Conexus Institute, echoed the sentiment that everyone should have access to tax-free retirement accounts. He emphasized the importance of aligning fund strategies with the needs of all members, including those with lower balances, to ensure equitable access to retirement benefits.
Super Consumers Australia praised Cbus for its decision to eliminate minimum account balances for retirees seeking pension accounts, advocating for broader industry-wide reforms to remove similar barriers. The organization stressed the significance of ensuring that all retirees can benefit from tax concessions, not just those with higher balances.
As the landscape of superannuation continues to evolve, the focus on inclusivity and accessibility in retirement planning becomes increasingly crucial. By addressing barriers to entry and advocating for legislative changes, funds like Cbus are paving the way for a more equitable retirement system that caters to the diverse needs of all members.
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