“When we look at the differences between APRA-regulated funds, self-managed super funds, and some of the statistics in relation to how many members are actually in retirement phase as compared to accumulation phase, it seems that most super funds have got that about right,” Steed said.

”We know our current cohort of retirees is a relatively small section of the population, and they tend to be very conservative. They've lived through some hard times. They're still post-war soldiers, and particularly in SMSFs.”

She continued that when looking at the cohort who are still in SMSFs there is a significant number over 80 years, but in APRA-regulated funds the number of members over 70 is statistically very low.

“So in self-managed super funds, a lot of times we have a much higher percentage of members already in retirement phase, and they tend to focus their minds on their retirement income. But again, they tend to be very conservative,” she said.

Aaron Dunn, CEO of Smarter SMSF, said there is a much larger representation of SMSF members that are in drawdown phase, but there are still concerns from the government about whether they are actually drawing down enough in retirement.

“It's commonly said that you shouldn't be using superannuation as an estate tool, but that's not necessarily always the case here,” he said.

“There may be instances of that, but part of it is they don't understand how long they are actually going to live and therefore they do take a much more conservative approach. So while the retirement income covenant doesn't have a role within SMSF, the same principles are ultimately applying here, because the SMSF cohort is a very small percentage of overall Australians at that stage in life.”

Steed said there is evidence that most retirees die with their wealth essentially intact, especially over the past 10 years as investment returns have been quite strong.

“But my observation in dealing with multitudes of advisers is not that the current generation of retirees deliberately are not spending their money because it's going to be tax effective for their adult children to receive as a benefit, it’s because they're not spending their money as they're terrified of running out,” she said.

While the SMSF sector has choices regarding retirement products, she said in her experience there are still many advisers, and clients, who don’t fully understand how they work.

“People have enough difficulty understanding account-based pensions.”

“Advisers have difficulties in keeping their head on top of all of the rules because they do keep changing. Annuities are complex products, and for a lot of advisers to understand that is doable, but to expect a lot of ordinary Australians to understand how those products work, even if they're aware that they exist is much harder.”

Steed added that there is a lack of information about how retirement products work and who they would suit, and it is this area where people need to be able to access personal financial advice.

“There are other ways that we could encourage people to look at those risks, but every person will be different, so it's going to come back to either ‘I'm making those decisions myself because I can understand and digest the information and understand what it means for me and my family’, or ‘I'm going to have to access financial advice’,” she said.

Dunn said one of the biggest drivers around SMSFs is tax and those who are getting advice about moving to pension phase understand there are tax exemptions.

“You can quite easily quantify what the benefit is going to be as a result of moving into retirement phase, whether that's from an income perspective, capital gains tax, franking credit refunds, all those things that trustees hold dearly to their heart when they move into the retirement phase,” he said.

“But those things aren't as obvious when it comes to APRA-regulated funds and therefore that level of motivation doesn't seem to be as much even though the benefits should be still very much the same as you would see in a self-managed fund.”

Steed added that the government could assist with awareness of retirement products through various departments and their data.

“The ATO knows how old you are and they know where your super fund is. Could they send a message that says, ‘We noticed you've met a nil cashing restriction condition of release by virtue of being over age 65. Have you thought about being in retirement drawdown phase’ or something to prompt fund members to think about it?” she said.

“The lack of action is often just due to inertia – ‘I'm in accumulation phase and I know I've got super. Do I understand the benefits of moving to retirement phase? Do I even know that that's an option?’ Many Australians won't. Perhaps those sorts of nudges could come from government departments that have that data.”