rose from 15 percent in 2002 to 33 percent in 2006 but fell to 23 percent in 2007.<sup>34</sup> For retail funds, pension payments have grown from 8 percent of total payments in 1997 and 15 percent in 2002 to 30 percent in 2007. In 1997 virtually no pensions were paid by industry funds, but pension payments have grown, particularly in the last 3 years, to represent over 12 percent of total benefit payments. Other funds, which comprise small funds with less than 5 members, show an erratic pattern, which may be due to gaps in the statistical data

**Table 17** : **Proportion of Pension Payments**

||2002|2003<br>2004<br>percent of tot|2005<br>al benefits|2006|2007|
|---|---|---|---|---|---|
|Public Pension Funds|41.5|46.6<br>51.2|66.0|64.8|68.6|
|Retail Funds|15.0|14.0<br>18.1|21.0|24.8|29.6|
|Corporate Funds|14.7|18.2<br>26.7|30.0|33.3|23.1|
|Industry Funds|5.6|4.8<br>10.0|11.5|11.1|11.9|
|Other|3.7|50.0<br>5.1|5.1|51.2|61.8|

**Source: APRA**

It should be remembered that prior to the legislative changes in 1998, government and large corporate funds were generally the only type of funds offering superannuation pensions and that members of other types of funds were compelled to take lump sums. However, the legislative changes in 1998<sup>35</sup> made it more attractive for a wider range of superannuation funds to offer pensions and pension payments as a percentage of total benefits have been increasing since that time, although most would be allocated pensions rather than lifetime pensions.<sup>36</sup> The decline in the proportion of benefits taken as a lump sum has been associated to some extent with the rapid growth in superannuation balances as a result of the increase of regular mandatory contributions. As these balances have grown there appears to be a greater desire by people to take them as income streams to support them in retirement.

Until the introduction of compulsory superannuation and the growing realization that in order to live comfortably in retirement additional savings will be necessary there was a strong incentive for people to manage their financial affairs with a view to maximizing their access to the age pension. Retirees could also “double dip” by taking their lump sum, spending it as they wished and then apply to receive the age pension. The system provided encouragement for early retirement for those with accumulated superannuation which they would use to live on until they became eligible for the age pension. This was a function of the wide difference between the age at which a person could take early retirement (55) and the age at which they could get access to the age pension (65) and the fact that the early retirees needed funds on which to live until they reached the pensionable age, making double-dipping a natural outcome of early retirement.

> 34 There was an increase in the value of pension payments but a large jump in lump sum payments, perhaps related to industry restructuring.

> 35 In 1998, the Government extended the income streams qualifying as complying pensions and annuities to include non-commutable income streams that pay a guaranteed income for a person's life expectancy. 36 The definition of pension benefits includes the total value of benefits paid to fund members in the form of a pension.  It includes complying pensions, allocated pensions and annuity payments.

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