Superannuation funds are currently warning retirees that their pension payments are about to be cut by half under new changes that come into effect from July 1.

"You know, as far as I know, I'm not cognitively impaired and I do have a tertiary education and English is my first language — and yet, I had difficulty,” explained Sandra Luntz to ABC.

The 76-year-old former speech pathologist had to turn to her daughter to explain the letter.

Currently, the Federal Government requires retirees collecting on their superannuation to withdraw a minimum amount each year.

At times of financial instability, like now with the COVID-19 pandemic, the Government has moved to reduce the minimum drawdown as one of the measures in its COVID-19 stimulus package as it can be counterproductive to force people to draw on their super too quickly.

If they withdraw too much too quickly, the superannuation that is supposed to last the rest of their lives will not do the job.

Retirees are able to elect to set the payment to a higher level if it suits them better, but Luntz’s daughter Ann Pearson is worried about the people who might be caught unawares.

"So my mum's on the minimum pension and I know for certain that mum could not live on half the amount of money that she's getting at the moment," she told AM.

As Pearson is Head of Wealth products with Australian financial services company ClearView, it’s her job to understand the superannuation system of Australia.

"My mum is quite financially savvy, but she wasn't aware that this would be happening," Ms Pearson said.

"And when I told her, she was horrified, and not just horrified because her income was halving, but also horrified that someone had actually made this decision on her behalf without consulting her, and [horrified at] having had her choice taken away from her."

Jason Poole from financial planners GPA Matrix said that more could have been done to alert people about the changes.

"It's the sort of thing that could almost have its own TV campaign, a government announcement: 'You can reduce your pension if you wish and your administrator may well just forcibly do this to you,'" he said.

The Assistant Minister for Superannuation and Financial Services Jane Hume said that superannuation trustees should do what’s best for its members.

"Trustees should be carefully examining what's in the best interests of their pensioner members and not risk being perceived to hold on to people's money," Senator Hume said.

"Some pensioners may need the money now, others may want to only take the minimum drawdown."

The way that superannuation funds will handle the changes coming July 1 will be handled differently depending on the fund.

"They are automatically reducing people's pensions to the new minimum. For those people, it could be quite difficult for them to suddenly discover that they don't have enough money in their bank account to pay their bills," explained Pearson.