Coalition backflip on superannuation hurts retirees

Treasurer Scott Morrison announces further changes to superannuation.

Coalition backflip on superannuation hurts retirees

In a major reversal of an ‘iron-clad’ election policy to support the super changes in the 2016 Federal Budget, the Treasurer yesterday announced the lifetime cap would now be dumped.

After intensive lobbying by government backbenchers, perhaps the most controversial of the changes, the $500,000 lifetime non-concessional cap is out, replaced by a reduction in the annual cap from $180,000 to $100,000. Those under 65 will still be able to use the ‘bring forward’ rule to make three-years’ worth of non-concessional contributions in one financial year. Whilst this is ‘typically less than $200,000’ it can be up to $325,000 until the limit of $1.6 million is reached.

From 1 July 2017, anyone with a superannuation balance over $1.6 million will no longer be able to make non-concessional contributions to super – a limit that will henceforth be indexed to the balance transfer cap.

It is estimated that only around one per cent of superannuants actually reach the $1.6 million transfer cap. By replacing the lifetime non-concessional cap with the reduced annual cap, the Government will forgo around $400 million in savings over the forward estimate period so, to make up this shortfall, the Government will no longer proceed with the harmonisation of contribution rules for those aged 65 to 74.

This may be considered a blow to older Australians trying to boost their superannuation savings, as the proposal to remove the restrictions on 65 to 74 year olds making voluntary contributions has been scrapped to fund the changes to the lifetime non-concessional cap.

Put simply, if you wish to continue to contribute to super after age 65, you will need to be in the workforce. This will obviously make things difficult for those unable to work for reasons of health, discrimination or those working in ‘sunset’ industries such as manufacturing.

Catch-up concessional superannuation contributions will be deferred until 1 July 2018 to ensure the full cost of changes to non-concessional contribution arrangements are met over both the forward estimates and the medium term.

Mr Morrison described the changes as ‘fairer, more flexible and sustainable’ and said that he expected this revision would receive Opposition support. "It removes every impediment that Labor mentioned,” he said.

Shadow Treasurer Chris Bowen claims that the Government had backflipped on the ‘iron-clad’ policy it took to Election 2016 and that Labor would not simply wave it through, adding that his party would take time to fully scrutinise the package before giving it the option to pass.

Read Mr Morrison’s press release
Read detail of the superannuation changes with facts sheets

What do you think of these changes? Is the Government satisfying the needs of the wealthy over the needs of the rest of us? Or do you think they are fair changes?

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    COMMENTS

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    johnny
    16th Sep 2016
    10:07am
    The proposed $500,000 lifetime non-concessional cap would have affected 1 or 2 percent of Australians. How many people can afford to contribute such huge sums from their post-tax incomes? Still everybody made so much fuss about it. It looks like all parties are working only for the rich. There should have been more focus on the reduction of concessional contribution from $35000 to $25000 and the means test of assets which would affect a larger section of people.
    Greg
    16th Sep 2016
    10:54am
    There would be a lot of people downsizing, selling their home which has gone up in value substantially and wanting to put the excess in super - I know I want to but they've made it harder now.
    Old Geezer
    16th Sep 2016
    11:01am
    Be able to contribute up to 75 certainly would of helped with tax planning but there is always plan B.
    Anonymous
    16th Sep 2016
    11:18am
    As ScoMo said - it does give people an aspirational amount of $1.6m to aim for - which is not a bad thing for the country's finances if you can get there.

    And you don't have to be so-called super rich to benefit if you are under 65. You can wash out some or all death tax by re-contributing $100K per year and $300K 3-year bring forward just before 65, re-balance super amounts between partners in an SMSF, etc.

    It will work for many people - IF they pay attention to the rules - most won't unfortunately.
    Rae
    16th Sep 2016
    2:11pm
    I am disappointed too OG as I had planned to add to a small accumulation fund still running, adding savings each year until I reached 75 but that lazy cruise around the Pacific will be more fun anyway.
    Old Geezer
    16th Sep 2016
    2:14pm
    I agree Rae. So that lazy cruise around the Pacific in November/December was a good idea after all.
    Rae
    16th Sep 2016
    3:16pm
    Most definitely OG.
    Anonymous
    16th Sep 2016
    8:02pm
    Rae - assuming you are of pensionable age, you can use the Seniors and Pensioners Tax Offset (SAPTO). This means you can earn around $28K per year tax free and compound it as required.

    No different from super tax-wise in reality. I don't understand how just because one door might be locked why most people don't look for the one that is open?
    Old Geezer
    16th Sep 2016
    8:13pm
    The idea is to use your SAPTO and then have the rest in super so that you pay little if any tax.
    Anonymous
    16th Sep 2016
    8:49pm
    RAE has stated that she wanted to use super to save until 75 - but now can't because of the new 65-74 rule changes - so Rae is going to spend it instead.

    So super is now not an option for Rae.

    I am saying there is the SAPTO option to use outside of super that has the same tax advantages of super for the amount she appears to require - so you are not disadvantaged by the 65-74 rule change to super - if you are prepared to look.
    Rae
    17th Sep 2016
    8:23am
    Thank you Reasons.

    I do use the SAPTO up to the limit and with deductions it is closer to $33000. I was always suspicious of superannuation funds and government meddling with them. Most of my income producing assets are held outside super.

    I also have a pension from super. I had two funds. In fact I had three. One from academic lectures and work I did for the army. I rolled that into my main fund and take a yearly pension from it.

    I have never spent all I earn. I always save. You need to be prepared. I'm pretty frugal actually.

    The door unlocked is a lovely holiday. There is nothing wrong with it. I travel quite a bit actually. It is the one thing I indulge my savings on.

    If the government doesn't want my savings going into super after 65 and retirement I'm not going to argue. Let's call it what it is--- A tax minimisation scheme and it mostly serves the wealthy.
    It is a good thing that those tax concessions are beginning to be brought under control.

    As I've said before I make more money outside super, with very few rules or impositions and claim the huge tax deductions and pay my tax after that. I do not fear tax at all.

    Where did I ever say what amount I require Reasons. There is no new rule changes. You were never allowed to contribute after 65 unless working.

    If I really wanted to I could work in my son's business for a month and use that to contribute tax concessional amounts but it just isn't that important. But that tool makes a mockery of the whole thing really doesn't it.

    As I said I had planned on using the accumulation fund still running if the rules changed but they haven't. Bit of a shame for me but not really all that important.
    Anonymous
    17th Sep 2016
    8:42am
    Rae - you just indicated you wanted to save over time - so I just guessed that it would not be more than say $500K-$600K in a SAPTO environment. (eg $600K at 5% = $30K interest/return - therefore you roughly keep under the taxable threshold).

    Morrison was going to let us contribute concessionally up to 74 without working - but that is now dead so he can make savings there now he has allowed the $100K annual cap.

    Travel is good - we enjoy the same thing.
    Old Geezer
    16th Sep 2016
    10:24am
    Good to see people can actually now get to $1.6 million however one should still be able to contribute non-concessional money up until 75.
    Carole
    16th Sep 2016
    10:47am
    Bloody typical of this govt, I'm fed up with them and so glad I didn't vote for them. I'm 66 and not working as my work in Aged Care played absolute havoc with my back. I recently had a small to average inheritance from my parents which, after the last budget, I'd hoped to put into super to increase my income. Can't now, and with interest rates the way they are I may as well spend the lot.
    Anonymous
    16th Sep 2016
    11:28am
    You can get the Seniors and Pensioners Tax Offset (SAPTO). This means you can earn around $28K per year tax free.

    If you had $500K invested and got 5% p.a. - you would earn $25K and not pay any tax.

    There is always more than one way to skin a tax cat to your advantage - you don't have to be a so-called super-rich to get tax benefits if you ask questions and research.

    This works for super - as well as those without it. Super does not count as income - so you get the tax free threshold outside super and SAPTO is tax effective if you go past $1.6m.
    Anonymous
    16th Sep 2016
    12:29pm
    I think they should have allowed people up to 75 to contribute even if not working.
    You can still contribute but you need to work 40 hours at least to do so.
    Maybe some could get a temporary job to qualify to put in extra super i.e. an inheritance

    16th Sep 2016
    11:08am
    What a disgrace! Once again, hurt the battlers to indulge the rich. First, a relatively small number of retirees were viciously attacked and deprived of up to half their income - a disgusting act of discrimination that made a small group carry the cost of economic downturn while the rest of the community remained relatively untouched by comparison. Now the battlers who can't remain in the workforce after age 65 are forced to bear a financial burden so the very rich can be over-indulged.

    This government is disgusting.
    Polly Esther
    16th Sep 2016
    11:23am
    Circus acrobats actually
    johninmelb
    16th Sep 2016
    11:24am
    Yep, this government is disgusting, as were all the others before it.

    So the question remains, WHAT ARE YOU GOING TO DO ABOUT IT?

    I can assure you quite categorically that Turnbull and Co don't read the incessant rants on this website, so they neither know nor care what you think.

    So again I ask, WHAT ARE YOU GOING TO DO ABOUT IT?
    Old Geezer
    16th Sep 2016
    1:51pm
    I can't see how this is going to hurt the battlers at all or can I see how it will indulge the rich either. All it will do is make it simpler and not make accountants rich because of the complexity of the original proposal.

    Battlers as well as the rich can remain in the workforce after 65 and can still retire when ever they wish. No change there. Only change that was not approved is that those with money can't contribute after they reach retirement age unless they are in the workforce.

    Nothing disgusting about it all Rainey.
    Rae
    16th Sep 2016
    2:22pm
    I wonder why the Labor party was so bitchy about letting past workers top up super. Was it really going to cost much or was it just ideological? Up until that 1.6 mil surely it would not have hurt.
    Anonymous
    19th Sep 2016
    3:22pm
    It will have no effect on those on here who are getting the pension...I dont know why they are so upset...unless they are telling porkies and have a lot of money squirrelled away?
    MICK
    16th Sep 2016
    11:23am
    Only 1% reach the magic $1.6 million figure. So who are the changes meant to benefit? Obvious.
    Given that governments (taxpayers!) heavily subsidise the superannuation system I might have thought that it would make no difference to take out most of the subsidies and pay a proper pension. The only difference is that currently money which could be allocated to pensions is primarily being given to the top end via the superannuation system. That is wrong but that is politics. The rich man's party always looks after its cohort. Hence the backflip on the iron clad election lie. Never changes.
    Rosret
    16th Sep 2016
    11:33am
    10% at the moment not 1%. However inflation is going to take that up within a few short years. But never fear, I just got my 2015-16 super statement. My super fund is going to make sure I never reach that target!
    Malcolm is probably doing us a favour. Invest in asset producing ventures and take care of your own retirement. The advice I am giving my children is a complete 180 from what I have done. Silly silly me.
    Anonymous
    16th Sep 2016
    11:45am
    Rosret - I totally agree - you have to learn from your own mistakes and make sure your kids don't repeat them. I see nothing wrong with an aspirational figure of a $1.6m indexed amount.

    If you are fortunate enough to be self-funded you don't have the pressures of being 'owned' by the reigning government elites ideology and pension limitations.

    The more your kids understand this and do something about it - the better off they will be.
    MICK
    16th Sep 2016
    1:22pm
    We do not have money in super any more but we do have assets outside of super.
    The thing with super is that tax is only 15%. That is a wonderful deal if you are trying to escape the top marginal rate of 49%. When you get your money it is then all yours to do with as you wish.
    My take is that you need a mix of both. This is what the rich do: they milk everything they touch to get the best out of everything whilst getting taxpayers to subsidise them for whatever they can. Sadly the rest of us are not in that league because they do not earn high incomes. That's life...and politics.
    Anonymous
    16th Sep 2016
    2:26pm
    Interesting Mick that you don't play the game but you want to make the rules. You don't have super, you don't want to have super yet you want to tell those who have super how you want it to be.
    Anonymous
    16th Sep 2016
    4:16pm
    Old Man I think Mick is after the pension like all the Laborites on this blog, and obviously talks from his pocket book?
    Anonymous
    16th Sep 2016
    7:45pm
    MICK - your arguments are a bit convoluted - but if someone can use the tax laws (and it has to be done alongside smart investing over many years) - good on them if they are prepare to sacrifice consumption for a more comfortable retirement.

    I am sure there are benefits in not being reliant on government welfare, politicians largesse, Centrelink supervision and changes to pension payments if you can avoid it. It certainly is more cost effective for the public purse.
    MICK
    16th Sep 2016
    9:16pm
    The normal malicious argument you get from Liberal Party rusted ons.
    My 'advice' is on how to maximise returns so let's not put words in other people's mouths.
    Pension? Only if I sell our investments and spend the money. Certainly under a LNP government only the rich will end up well and retirees will be pushed off the pension left, right and centre.
    "Convoluted"? Hardly. The system was not set up for ordinary citizens. It never is. The elites have to provide just enough bait so that their own greed can be justified. Hence the current superannuation system.
    Anonymous
    16th Sep 2016
    9:37pm
    Mick - the same applies to you...

    If a person earning $60K per year saved $350 per fortnight and compounded it for 45 years at 5% - they would have $1.6m in their super. Remember - over HALF that $350 per fortnight is the compulsory super 9%.

    So a very ordinary and lowly Australian Labor voter could have $1.6m in super - because by using my simple compound interest figures - they saved for their comfortable retirement - instead of spending and consuming so they can make the rich and elite like Turnbull wealthy.

    I think even a rusted on Labor voter could end up understanding simple compound interest and how they too could use the super system and have $1.6m at retirement.
    MICK
    17th Sep 2016
    8:25am
    The normal coalition rubbery argument. Who can save $360 per fortnight on $60,000 pa before tax. You make a laughing stock of yourself.
    I used the super system but have no money left in it as I do not trust our right wing governments. Blind Freddy can see them hovering over the super pool.
    My understanding of mathematics goes far beyond compound interest and your obvious basic understanding of the subject deride me as you will. As always it is the coalition trolls who lack any understanding about average citizens and their cost of living. Never changes for the elites.
    And AGAIN, for the record, I do not vote Labor....even though I sympathise with many of the party's ideals.
    Anonymous
    17th Sep 2016
    8:57am
    MICK - you are a very confused individual - but amusing in your 'convolutedness'. I hate the Libs right wing with a vengance - but if think you can't trust them to look after your super - you are seriously missing the point in the light of recent rule changes. I have been in super for about 45 years and have seen it all - governments have NEVER got away with retrospective taxes - didn't this time either. Governments have been hovering forever - been the best environment I know for accumulating assets - and still is!

    16th Sep 2016
    11:29am
    So much for Talkbull's "ironclad", and now it is over to Malcolm Gillard.
    john
    16th Sep 2016
    11:33am
    Who in the Mr and Mrs Average world , have 1.6 million in super ?

    I certainly don't no where near it and I put in 30 years in a govt corporation , for a measly amount of lump sum, and paying 5% compulsory super each pay, all I could afford , so this story barely affects most retirees I'd say.
    Perhaps there are some who could afford to be higher super rate payer while working , a bit different with children over the years and commitments, so unfortunately I am quite surprised that there is this huge budget super story being reported when most of us won't even be affected.
    And when most of us are the working parts of this nation but still struggle along with not much help even when helping yourself, while a minority are making heaps and getting giant supers.
    I am quite baffled?
    Anonymous
    16th Sep 2016
    1:34pm
    John, this is financial inequality brought about by rules, regulations, legislation, etc enacted by the GOVERNMENT for themselves and their wealthy and privileged cronies. The now PM lives in a world of his own, totally out of touch with reality as Australia's working class knows it. This snob of a leader panders to the wealthy and couldn't give a damn for the rest of the population. His only interest is having the title of Prime Minister and filling his pockets and those of his sycophantic greedy political supporters who get government assistance because of their contributions. This country is going right down the shitter because of this half-arse coalition with Talkbull as it's puncy leader. Until he is ousted things will only get worse. This is a sad, but true, fact of life. This guy is ruining Australia!
    Rae
    19th Sep 2016
    7:41am
    If you worked for the government as a public servant you probably didn't get the tax concessions either. Not all saving into superannuation were able to access tax concessions or use re contribution rules to magically make tax concessional super look like fully tax paid super.

    Scott Morrison should have sorted that mess out a bit better. I don't think he understood it at all.

    The whole trick of washing super should be stopped as far as I can see it is a rich person's rort.
    SGW
    16th Sep 2016
    11:45am
    I see Abbott's still in control
    HarrysOpinion
    16th Sep 2016
    11:46am
    Simple Definition of ironclad
    : not able to be changed...
    - Who can now trust what the prime minister Malcolm Turnbulldust ever promises? - NO ONE CAN !!!!
    Renny
    16th Sep 2016
    12:08pm
    Boo hoo. They favour their rich pals and themselves yet again. How about a pension and Newstart increase. BTW. I'm self funded. Sick of wealthy people whinging because they might have lost yet another tax dodge. Even more suck test the damned LNP listen to them.
    LiveItUp
    17th Sep 2016
    7:34am
    Why can't super be a tax dodge as it is better for the economy than collecting the OAP?
    Rae
    17th Sep 2016
    8:40am
    It is costing too much though Bonny. At $30 billion+ it is tax minimisation that really only benefits high income earners.

    Low income earners will never end up with much after fees and insurance etc so would be better off spending that money on a home in my opinion to save paying a landlord all their lives.

    I haven't seen any evidence that it is better for the economy. Besides which the economy can look after itself providing society is fair and income distributed in an equitable manner.

    Like it used to be.
    Anonymous
    17th Sep 2016
    9:30am
    Rae - I totally disagree - and Treasury have the figures supporting that it is a cost effective government retirement strategy.

    Taken from the Treasury link below - your assertions that super is an impost is dispelled - welfare is more costly - by over $9B...

    "The value of superannuation tax concessions in 2012-13 ($31.8 billion) is around $9.2 billion less than the value of direct income support for seniors ($41 billion)."

    http://www.treasury.gov.au/Policy-Topics/SuperannuationAndRetirement/supercharter/Discussion-Paper/Charter-of-Superannuation-Adequacy-and-Sustainability
    Rae
    19th Sep 2016
    7:54am
    Only Adequacy and Sustainability Reasons. I'm surprised Morrison didn't ask them to fling in Fair as well just to make it all seem real and efficient.
    Renny
    16th Sep 2016
    12:09pm
    What death tax?
    Anonymous
    16th Sep 2016
    3:52pm
    Your super generally has a taxable component that your kifs have to pay. 15% + the medicare levy
    Anonymous
    16th Sep 2016
    4:32pm
    Kifs = kids
    PAYEdmydues
    17th Sep 2016
    10:53am
    Your estate is taxed on concessional contributions.
    Non concessional contributions are not subject to death taxes. By withdrawing and recontributing you can increase the non concessional amour. And transfer to your spouse.
    PAYEdmydues
    17th Sep 2016
    10:53am
    Your estate is taxed on concessional contributions.
    Non concessional contributions are not subject to death taxes. By withdrawing and recontributing you can increase the non concessional amour. And transfer to your spouse.
    Hairy
    16th Sep 2016
    12:15pm
    It favours the rich what did you expect these arseholes just don't care as long as they don't suffer.if you voted for them well you need your doctor to check your heads out.they r are thieves and robbers of the poor.and the way these characters play with the PC I'm probably not allowed to complain but it's ok for them to brand someone as long as it's not a Moslem of course.they are all becoming disgracefull politician puppets under the rule of the Moslem run UN
    Alex
    16th Sep 2016
    12:45pm
    Hairy the LNP and politicians generally serve themselves and the big end of town. It is important to put blame for unfair policies where it lies and tackle the correct source of the problem.
    The United Nations has nothing whatsoever to do with it. If it had anything to say it would encourage social fairness. The UN is dominated by Western super powers and is certainly not 'Moslem run'.
    Australia is autonomous. I cannot understand why people try to blame appalling Australian Government polices by blatantly self serving Australian politicians on people who have no power in the country and have nothing whatsoever to do with them.
    We need to make our concerns clear to our politicians and not confuse arguments.
    Old Geezer
    16th Sep 2016
    1:56pm
    The rich would laugh at you if you thought $1.6 million was rich.
    Anonymous
    16th Sep 2016
    9:04pm
    But the rich say $820,000 is rich when it comes to discussing part pensions and asset tests. Double standards here. Lots of hypocrites in the world.
    Anonymous
    16th Sep 2016
    9:20pm
    No Rainey - the ruling elite say that if you want welfare in the form of aged pensions - use your OWN money first.

    And they are coming for the family home next in terms of assets tests - and so they should - the faster the better.
    Misty
    16th Sep 2016
    9:32pm
    Well OG there must be a hell of a lot of poor people in Australia because I know of no one in my country town that can afford to stash $100,000K of their salary per year into super, what sort of dream world do you live in?. I have a wide range of friends from all walks of life and most of them are struggling, certainly could not afford to put that amount of money per year in to super.
    Anonymous
    16th Sep 2016
    9:52pm
    Misty - even if you only had $100K in super - if it was all concessional contributions - it is deemed to be 100% taxable in terms of death taxes.

    If you have partner and made provisions to leave it to him/her then on your death there is no tax issue.

    Should you and or you partner die and leave the money to your kids, etc - there is 15% tax and 2.5% medicare levy death tax payable on the amount going to your beneficiaries.

    If you are under 65 and only had $100K - but took it out of super as a lump sum and re-contributed it all the next day - all death tax is removed should something happen to you.

    So the rules are NOT just for the rich to succession plan - anyone can do what the rich do - you just need to pay attention to the rules.

    The difference is the rich ask questions, research and take action. The poor usually just whinge and get screwed even though the same rules were available - had they looked and learnt.
    Misty
    17th Sep 2016
    1:11am
    Reasons what I said has nothing to do with who you leave your super to or how much research you do it is about how much the average person can contribute and that is basically very little. The average retail assistant, labourer, mechanic etc do not even earn $100,000 K a year let alone be able to afford to contribute that amount per year to their super. They can ask as many questions as they like, see as many Financial Advisers as they like but if they don't earn it there is not much point.
    LiveItUp
    17th Sep 2016
    7:29am
    Reasons if you put $100,000 non-concessional into you super and your kids get taxed on it after you die you need to sack your accountant now. Tax has akready been paid on this money. Concessional amounts however are only half taxed so further tax will need to be paid on them.

    If you leave it to a dependent then no tax is payable.
    Anonymous
    17th Sep 2016
    7:41am
    Misty - what most people focus on is the big $100K number - and then not see the forest for the trees.

    It just doesn't matter if you don't earn $100K.

    The rules still empower someone earning less who accumulates money in their super over time to use the same rules (at a lower level) to their advantage - IF they look and learn. You can either be a victim or take control of what you can and use the rules to your advantage.

    As I have written elsewhere - if a person earning $60K per year saved $350 per fortnight and compounded it for 45 years at 5% - they would have $1.6m in their super. Remember - over HALF that $350 per fortnight is the compulsory super 9%.

    You don't have to be a high earner to become comfortable in retirement - just determined, focused and willing to learn and save - not consume and spend when you are young.

    I believe in 2 things when it comes to retirement planning and saving money...
    - Pay yourself first - ALWAYS
    - Your younger self has to plan and look after your older self

    If it is too late for you - teach your kids and/or your grandkids what you now know and ensure they are better prepared for their retirement if possible. A majority of people only start learning about their retirement and the low amount the OAP pays when it is far too late to fix the problem. The problem is much easier fixed in your 20's and 30's.
    Anonymous
    17th Sep 2016
    8:30am
    Bonny - I am confident that I wrote you take out the $100K CONCESSIONAL (taxable) component as a lump sum and then re-contribute it to ensure there is no death tax.

    So I will sleep easy knowing my estate is safe for the time being from errant accountants and improper taxes!

    Concessional super contributions are NOT half taxed as you put it - the taxable component (percentage) of your super is death taxed at 15% plus the medicare levy of 2.5% - unless going to a dependent.
    LiveItUp
    17th Sep 2016
    12:23pm
    Prior to Keetings time concessional contributions to super were not taxed when they went in but taxed at 30% when taken out. He introduced the 15% on the way in and 15% on the way out. That is where the half taxed idea came from.

    The so called experts say that to get the most out of super you have to put in 15% of your wages. However I have put very little into super but it has grown hundreds of times it original value over the years and even today grows more than I take out as a pension. This year is the first year I have used the money I took out. I bought a new caravan with it. I usually just reinvest in somewhere.
    Misty
    17th Sep 2016
    11:31pm
    Reasons as I said before no one I know earning $60 K a year can afford to put away $350.00 a fortnight, especially if they have a mortgage, school age children and are paying off a vehicle.
    Anonymous
    18th Sep 2016
    7:42am
    Misty - and as I said before - you just pick a lower number that you can achieve and execute a plan - and stick to it until you retire so you have a comfortable retirement.

    That is how some VERY ORDINARY Australians become self-funded retirees - and are then considered to be super-rich by their peers when they retire. (which is highly humorous when you consider there are about 16 people who have more wealth than the bottom 30% of people in the world).

    That possibility to retire comfortably is lost on 95% of people - they are too busy consuming - and fail to plan for their retirement when they are young.

    Then they get the poops up with their peers once they reach retirement - because they see some have more than they do.

    Then all the excuses come out why they failed and self-funded retirees succeeded, like they have rorted the tax system, etc, etc.

    If you looked hard you will find a certain number have done nothing more than sacrificed and saved - when the majority of their peers merrily spent their way through life - and didn't plan.
    Boomah52
    16th Sep 2016
    12:58pm
    I think some new words need to be invented for these...
    Tom Tank
    16th Sep 2016
    1:11pm
    Ignoring the economics of this we have Turnbull yet again being unable to hold his ground against the LNP right wing.
    He stated categorically that the plebiscite musty be held because he went to an election with that as his policy but the superannuation was also his policy and he did say that was "Ironclad".
    Surely it is duplicit to change one policy, for whatever reason, but refuse to change the other one. Where does this man stand?
    There is certainly a strong body of evidence now that he is a captive of the LNP right wing and they have emasculated him. This is so disappointing when we had such hopes when he overthrew Abbott.

    16th Sep 2016
    2:29pm
    I look at the change as a breath of fresh air. It means to me that Turnbull is listening to others and is prepared to negotiate and change things to get legislation through. There is an old saying that a slice of pie is better than no pie at all. I suppose I could muddy the waters by naming other politicians who have changed their mind but suffice it to say that all sides have been guilty of doing just that from time to time.
    Anonymous
    16th Sep 2016
    8:59pm
    Yep, listening to the rich and privileged and obscenely over-indulging the wealthy, and screwing battlers to pay for it.
    Anonymous
    16th Sep 2016
    9:15pm
    Rainey - if a person earning $60K per year saved $350 per fortnight and compounded it for 45 years at 5% - they would have $1.6m in their super. Remember - over HALF that $350 per fortnight is the compulsory super 9%.

    So a very ordinary and lowly Australian is now considered to have screwed battlers and be an over-indulged rich person - because by using my simple compound interest figures - they saved for their comfortable retirement - instead of spending and consuming.

    I think some of you guys on this site need to learn some simple compound interest maths so you can understand how a number of very ordinary people are now what you call 'rich and privileged'.
    Misty
    17th Sep 2016
    1:19am
    Reasons I think you need to do some simple maths, I don't think many people who earn $60K a year would have $350.00 to spare from their fortnightly wages to invest, especially if they have school aged children, a mortgage and are paying off a vehicle as well as all the ordinary household expenses.
    Anonymous
    17th Sep 2016
    8:07am
    Misty - you failed to properly read what I wrote - over HALF that $350 amount is not seen as it is the compulsory 9% super employers contribution.

    AND - you just save as much as you can if you can't match that amount.

    Saying you CAN'T is what most people do - retirement winners say they CAN.

    You do that by paying yourself FIRST by not buying your lunch, that coffee, that beer, that holiday, that car, etc. - and saving it instead.

    Your youthful spending largely determines how most people live in retirement. I don't care what anyone says - you can always save something if you put your mind to it.
    Misty
    18th Sep 2016
    10:30am
    What is the point of living Reasons if one spends their whole life scrimping and going without to fund their retirement lifestyle that they may not even live to enjoy?, I don't think you will find many people in any walk of life who would agree with your lifestyle, ok I agree with saving when and where you can but not to the exclusion of most of life's pleasures, why you would lead a better lifestyle in prison these days then the one you recommend.
    Anonymous
    18th Sep 2016
    10:56am
    Misty - it's like life insurance - they are betting on you not dying and you are taking the opposite position.

    If you don't save for your retirement - you are basically betting you are not going to live.

    Ooops -the life expectancy of a male aged 70 is 17 more years - that means someone on the pension at 65 will live over 20 yeas longer.

    So, some people take this into consideration and make plans accordingly - so they don't have to put up with government largesse and Centrelink.

    You can have some fun along the way - BUT - you pay your retirement insurance premium - because actuarially speaking you are likely to live a long life.

    And when you start young enough the retirement saving impost is not onerous due to compounding assets.

    It saves those who do planning for retirement the pain of old-age government interference.
    Old Geezer
    16th Sep 2016
    3:42pm
    This article may be of interest.

    http://taxandsupernewsroom.com.au/index.php/2016/09/14/spike-number-people-intending-retire-soon/

    Average age of those intending to retire is 61. These people won't be eligible for the OAP until 66. So are they retiring to use up their wealth so that they can go on the pension at 66?

    "Owner-occupied home a potential funding source?" How much notice is the government taking of this?
    Rae
    17th Sep 2016
    9:09am
    Yes people will use the rules.

    That retiring early and saving money strategy by accessing the hugely beneficial aged pension is clever.

    Whatever they do to owner-occupied homes will cause further rule bending I suspect.

    Not many are stupid enough these days to risk reverse mortgages and negative compounding. It might have worked once when banks and governments were trusted.

    Do you think the advisors are stupid enough to cause a property crash by encouraging millions of boomers to all up and sell their houses? I know those advisors are not the brightest buttons in the tin but surely even the thought of it would cause some consideration of consequences of messing with people's hard bought homes.

    A lot of people love their homes. Messing in love affairs is fraught with danger OG.
    Rodent
    17th Sep 2016
    3:57pm
    Rae

    You make some good points , I have no love for Financial Advisors, I gave up in 2008 and run my own SMSF

    I have researched several Reverse Mortgage schemes, don't like them, too high a Payment %, and other reasons. Have investigated Homesafe Equity release , I asked lots of questions, got the answers but it all doesn't add up in the real world. Have extensively researched the Centrelink Pensioner Loans scheme, lowest % -5.25% compound , very useful for some, and likely to be expanded and altered, if some members of Parliament get there ideas through.
    Old Geezer
    17th Sep 2016
    4:25pm
    I already have in place a line of credit so why can't people use these instead of reverse mortgages? They are easy to set up and you don't have to use them. Best of all mine cost less than the standard mortgage rate in interest if I use it.
    crazy one
    16th Sep 2016
    4:32pm
    Well as it goes and shows you it makes no different if Labor or liberal is in they are only out for themselves and it will stay the same as the two parties gets together to stop any one else from becoming large enough to get elected but what's the different they have people that will always take their word every time.
    JohnM
    16th Sep 2016
    11:13pm
    This article says: Put simply, if you wish to continue to contribute to super after age 65, you will need to be in the workforce. Please tell me if I'm misinformed but, I'm fairly confident that, at at least my Super fund won't let anyone over 65 contribute after retirement!
    Anonymous
    17th Sep 2016
    10:06am
    Correct - unless you meet the work test - you can't contribute after age 65.
    Rodent
    17th Sep 2016
    8:44am
    Its interesting to read some of these interchanges between Misty, Reasons, Old Geezer , Rainey and others. Most of what is written is very useful and accurate, BUT only applies to Younger People who are still able to contribute , ie our kids, or others.

    For those of you that are of the view that the Family home should be included in the Assets Test, you have some supporters. You might like to read this article by Patricia Pascuzzo from CFSRI- it was in AFR - article is titled - Striking Balance for Family Home next stage of Super Policy. - my comment - its a pity she has not got one important fact right about over 65 numbers
    Rae
    17th Sep 2016
    9:26am
    The family home is included in the asset test but is only valued at $200 000.

    Perhaps it would be better to include the gross income of everyone over a lifetime instead. Gross income would catch up all those really wealthy with a heap of tax dodges at their disposal.

    The Italians did it beautifully this year by actually asking owners of luxury cars, boats and homes to explain how they came by them when their tax returns showed minimum incomes. The government collected a whole lot of overdue revenue.

    If gross income was considered low income earners who struggled to buy a home would not be robbed again.

    I say again because the first robbery was paying them less than a fair share in the first place.
    Anonymous
    17th Sep 2016
    10:09am
    I don't have the answer - and neither did Pascuzzo in the article - but I always find it somewhat unsustainable when someone with no house and $2m in the bank can't get a pension - BUT - someone with a $2m home and nothing in the bank can get a full pension.
    Rodent
    17th Sep 2016
    3:47pm
    Rae


    With respect it simply is not true to say the Family Home is currently included in the Assets Test, it is NOT. What the $200,000 difference figure is, is a Notional figure only. However I agree totally that an Gross Income Based - (call it an Assets test if you like) is the way to go.

    Even if it was proposed to use the Current Asset Test functionality by including a % of the family home, it simply would not work in practice. For Instance a Single Home Owner who after 1 Jan 2017 will LOSE 71.15% of their Pension leaving them with only $3304 pa If you added ONLY $150,000 Family Home value to their assets that Pensioner would receive ZERO Pension and at the Same Asset Values a Single NON homeowner would STILL receive $ 18,904 where assets are $500,000 and $7204 Pension where Assets are $750,000 using the current Asset Test Functionality.

    That's just one reason why ONLY and properly designed Income Based Pension Test would be a better way to go
    Anonymous
    17th Sep 2016
    4:49pm
    Rodent - if someone has sufficient equity in their own home - I think they will eventually be forced to use it through it being deemed appropriately.

    If that means they have to sell it and downsize - or for the government to have a controlled reverse mortgage scheme - so be it.

    Home owners can't have their cake and eat it forever. You can't have 'x' aged pensioners hiding millions in full view in their own homes getting up to full pensions.

    As 75% of Australian's assets are tied up in property, if people think the government are looking at super - you can guarantee they are looking much harder at family homes with regard to the pension assets test.
    Old Geezer
    17th Sep 2016
    5:24pm
    I'm hearing more and more financial advisors talking about the house part of the pension test so I agree the government must be looking at how it can use this stored wealth too.
    water greg
    17th Sep 2016
    8:51am
    I am surprised that how casually these massive amounts are casually mention on this site that is pensioner oriented. I can only hope they they are invested[directly or via super] in Australian property/business. If not how can we whinge about Chinese owning our country
    Anonymous
    17th Sep 2016
    10:13am
    Even pensioners are allowed to have money :-)
    Old Geezer
    17th Sep 2016
    5:22pm
    Some of us are fully self funded retirees and don't have our hand out for welfare.
    Anonymous
    17th Sep 2016
    5:47pm
    I am not convinced.
    Anonymous
    17th Sep 2016
    8:19pm
    No such thing as a ''self-funded'' retiree. These inflated ego narcissists who slag pensioners are too dishonest to admit that they benefited from obscene tax concessions and a much bigger share of national resources than battlers, and ultimately pensioners cost the nation LESS than the greedy inflate-ego selfish money-grubs who took took took over a lifetime.
    Anonymous
    17th Sep 2016
    10:10pm
    OK Rainey - I have seen these baseless whinges like yours time and time again about how pensioners subsidise superannuants - so I decided to run a quick spreadsheet on a model I have proposed on this subject.

    Assume a person earning $60K per year saved $350 per fortnight and compounded it for 45 years at 5% - they would have $1.6m in their super.

    Remember - over HALF that $350 per fortnight is the compulsory super 9% - so you don't have to find it.

    So let's see who wins this tax game...


    THE SUPERANNUANT WHO WANTS TO BE SELF-FUNDED...

    At 30% tax the person should have paid $2730 tax per year on a total of $9100 ($350 x 26) - but they only pay 15% tax - so it is reduced to $1365 tax per year.

    This is a total of $61,425 of obscene tax concessions that the person has received.

    They are now self-funded and GET NOTHING in retirement from the government - although I think they eventually get the health care card at some age - but don't quote me.


    THE PENSIONER...

    A single pensioner getting the full pension and supplements gets $22721.40 per year.

    This is a total of $454,428 in pension welfare payments if they only live 20 years.


    SUMMARY...

    So - a fully funded superannuant gets a pathetic $61,425 in tax breaks - and is considered to get obscene tax concessions - and considered to be a blight on society.

    The poor, hard done by, punished pensioner receives $454,428 in government welfare payments - plus medical expenses.

    The pensioner gets a MINIMUM of $393,003 MORE government assistance than the superannuant got tax breaks.


    I DON'T THINK IT TAKES EXTENSIVE MATHS SKILLS TO WORK OUT WHO IN SOCIETY IS WINNING THE TAX SCAM GAME!

    Maybe pensioners should watch out for self-funded retirees to start complaining about pensioners ripping them off - eh?

    (for those tax experts who will pop up with what I have missed with tax breaks inside super - lets assume had I invested the money outside super - that I put it in real estate and NEVER sold - so there are no capital gains - therefore the tax environment is similar - and my tax break amount of ~$61K is arguably right)
    Old Geezer
    18th Sep 2016
    12:09pm
    Unfortunately I didn't get any tax breaks on anything I personally put into super as I didn't put anything in. The only super I have is from way back when my employer put in the compulsory amount. So I got nothing in tax breaks for my super.

    So I am a fully self funded retiree and the pensioners are ripping me off big time.
    Anonymous
    18th Sep 2016
    1:16pm
    OG - you missed out big-time during Howard's era of tax concessions by not knowing the super rules.

    Before Gillard/Rudd took Howard's tax pig's trough away, you could salary sacrifice up to $105K per year at 15% tax. At the same time you were then seen as a poor person without much income and you could claim full family benefits. If your kids were working part time, you could get them to salary sacrifice into super as well so their income did not count to to you and your partners total income to ensure you continued to get all the government family benefit perks - including those lovely $1000 GFC giveaways.

    Dodgy Howard and Costello facilitated a magnificent tax era in which to increase your super balance. But many people missed it. You always have to pay attention to the rules of the day and leverage them for all they are worth while they exist.

    However, it is highly likely you DID get tax breaks outside super.

    If you kept assets for over 12 months you got/will get a 50% discount on capital gains.

    If you had shares with franking credits you got the tax credits back - and reduced your taxable income accordingly, etc, etc.
    Old Geezer
    18th Sep 2016
    3:16pm
    I retired even before John Howard was PM. I knew about all those super rules but having money in super back then was far too restrictive to how I wanted to invest my money. My super did grow exponentially during those years so I wasn't too concerned about adding to it. I didn't miss it as there was even better ways to make money back then. It was so easy to make money and keep most of it. Most of what happened back then was missed by the masses and I doubt that many people even know what really went on even to this very day. Just loved that dot com era.
    ex PS
    17th Sep 2016
    3:59pm
    It seems that the ALP refusing to back " mandated policy" will bring on economic ruin to the country, but if the internal faction of the LNP do it, it shows true democratic values.
    Double standards anyone.
    Old Geezer
    18th Sep 2016
    12:08pm
    No idea what you are on about.
    MD
    18th Sep 2016
    12:44pm
    Thanks to Reasons, Rae, O.G and Bonny I see no legitimate reason to contribute further - most anything of substance has already been posted.
    Old Geezer
    18th Sep 2016
    12:50pm
    It is good to see I am doing a good job.
    MD
    18th Sep 2016
    1:24pm
    Other than qualifying rider(s):
    I'm retired from full time work & > 65yo.
    Do not receive age pension (or for that matter, any direct social benefit).
    Freehold homeowner - a very modest 2br domicile.
    Non SMSF (not having anywhere near the funds considered adequate).
    Modest balance in super fund <40K.
    Half that in savings.
    Been OS once 40years ago - for bus.
    Currently work occasionally for $24/hr - as & when required (av 5hrs/wk).
    Patiently await the retirement of my wife, supporting us on average wage (who in turn will then have a modest amount in super).

    So for those herein that regularly lament their lot and lambaste those (they) consider "rich and greedy" - be they tax dodgers, skimmers or otherwise - then dare I suggest a re-evaluation of our respective lot(s) that, without resorting to peer comparisons, they might, just might mind, find some small degree of satisfaction with their own lot. Thereafter maybe even contentment or happiness ?

    As our grand-kids would say - 'Yeh right'.
    Anonymous
    18th Sep 2016
    1:44pm
    MD - I could not agree more.

    Be it by good or bad planning - or just bad luck and genes - once you get to retirement and stop work - that is your lot in the lottery of life.

    If it is bad genes then hopefully the government's welfare system supports them (and is improved fro the present).

    If it is bad luck - at least there is something there in terms of government support (pensions don't exist in many countries).

    If it is bad retirement planning - the person might be regretful - but they definitely need to make peace with the world and themselves - and be satisfied with their OAP lot.
    Rodent
    18th Sep 2016
    1:39pm
    Not wanting to inflame or upset the SFR people - Non Age Pensioners -readers especially Rainey might like to Google this
    "Pensioner Implores Prime Minister to Reverse Savage Cuts"- The New Daily- buried in that article you will see an "interesting letter written by a 86 year old accountant who may have his facts right- just thought SOME might be interested
    Anonymous
    18th Sep 2016
    2:27pm
    Rodent - it has been recently suggested that there should be an independent tribunal for the setting of pensions similar to what happens with minimum wages.

    I think that a specific tribunal is a sound idea as there are significant differences between pensioner needs that the present systems fails to address.
    Old Geezer
    18th Sep 2016
    3:28pm
    Rodent this agreement has been around for ages now. If there was in substance in it then why did some retirees accumulate more than maximum assets allowed now? Such articles make us who accumulate more than the maximum assets more of less fools. Luckily most of fools can see the benefits way beyond collecting the OAP.

    I have said many times these people effected need to simply use their capital to live as well as the interest. One would think by reading such articles that these people couldn't use their capital but it just a matter of they don't want to. Sorry folks if you save for retirement then the saving is over and the spending has begun.

    The new asset test will not make any difference to people's future savings.
    Anonymous
    18th Sep 2016
    5:21pm
    That is a rather harsh, blunt and inaccurate assessment of the article OG - the consequent outcome of the changes to pension thresholds is damaging for some pensioners - and will likely have long-term investment affects.

    Anyone on the full pension gets $30 more per fortnight from July 1st 2017 - but it is probably right in determining that many will get a lower standard of living - especially if they do what pensioners are reported to do - save.

    There is always long-term cause and effect when changes like these are made. Pensioners have propensity to reduce their spending even if they have money - as they are unsure of their future income - it is reasonable to assume the government will keep cutting.

    That has an effect on what pensioners spend money on and how much they spend - which will have an effect on the economy.

    Younger people will look at the pension changes and either take Morrison's aspirational approach and try for $1.6m - or lose heart.

    It is too easy to lose heart, not bother with retirement and spend and consume instead - evidently few make it to $1.6m presently.

    My long experience with super shows that most people use government changes as an excuse not to take advantage of it. This has been to their financial peril when I compare those I know who ignored super to those who have leveraged its benefits.

    The new assets test will most definitely change people's spending and saving habits - especially once their advisers get in their ears.
    Rodent
    18th Sep 2016
    5:33pm
    Reasons

    I respect your views, not sure this statement is correct, but will check with my master spreadsheet.

    Anyone on the full pension gets $30 more per fortnight from July 1st 2017
    Anonymous
    18th Sep 2016
    5:39pm
    Sorry - it's from Jan 2017
    Old Geezer
    18th Sep 2016
    5:50pm
    I disagree Reasons. Some people only use super for their retirement. But the majority of those people who fail the assets test today will not have all their money in super. Most self funded retirees I know do not use super for their main investments as it is way too restrictive and they are cautious of having large amounts of their wealth in super.

    I personally do not like super even though I use it as a tax shelter. I consider it as too risky in that it is at the whim of the government to make adverse changes so I only hold a small proportion of my wealth in super. I know many others who do the same.

    If you had all your wealth in super how would you feel if the government decided to nationalise super?

    That said the asset changes will have little if anyeffect on the economy as people may whinge but they will still spend similar amounts to what they do today. Old spending habits are hard to break. The most likely outcome of these asset changes will be that they help the economy in that people will spend more so that they get the pension back sooner rather than later if for nothing else then the benefits they get with it.
    Anonymous
    18th Sep 2016
    6:27pm
    Nationalise super - yeah - sure OG.

    I assume you saw what happened recently when they made some detrimental changes to super and the resulting political outcome?

    They will nationalise bank savings before that happens as it is more easily accessible - and that ain't going to happen either (with the exception of amounts above $250K in one account name should a bank go to hell).

    And unless you are using an industry super fund or something similar - there is nothing an SMSF fund run by individuals can't invest in - as long as it is legal and kept at arms length.

    It is an interesting conspiracy theory you propose on getting people to spend more so they can get their pension back on track. The same thought went through my head when reading some recent articles on the changes. The government needs more spending to keep Jobson Growth on target.

    I am hoping they are not that cynical - which should immediately alert me to it being a possibility.
    Old Geezer
    18th Sep 2016
    8:31pm
    It would not surprise me to see super nationalised before people under 40 today reach retirement age. ACCOS or one of those organisations is already called for super to be nationalised.

    Although you may be able to invest in almost anything within a SMSF the cost and paperwork involved is not worth it to me. I just keep it simple in super and do all the other stuff outside super.

    People are already spending more to get their pension back on track. A couple of relatives are now spending like there is no tomorrow because they will lose their pension unless they do. New house, car, caravan and lots of overseas trips. I have no idea what they are going to do with a 10 bedroom house with nearly as many bathrooms. All I can see is dust, mould and lots of cleaning.
    Anonymous
    18th Sep 2016
    8:44pm
    Section 51(xxxi) of the Constitution of Australia limits the power of the Australian government in the area of nationalisation to “the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.”

    "...on just terms" means compensation - as happens with compulsory land acquisition.

    So - I seriously doubt any government will nationalise super legally - or illegally in anyone's lifetime.
    Old Geezer
    18th Sep 2016
    10:23pm
    I see it as a simple change in super laws not the constitution. Currently super goes to whoever you nominate or through your will upon your death. It would not take much to change this.
    Anonymous
    18th Sep 2016
    10:40pm
    OG - you can take all the wild legal guesses you like - but the outcome is the same.

    Australian Constitutional Law would still apply and the need for governments to justly compensate for taking over super funds would make the outcome neutral.

    I have heard this argument before - it is urban folklore - and it is generally perpetuated by those with little or no super - and a lack of understanding of the law.
    Old Geezer
    19th Sep 2016
    7:25pm
    Well I certainly don't fall into the category of little or no super but I would rather pay tax then have too much of my wealth at risk. All that the government would need to do is legislate that once you depart this mortal world your super will be used by others instead of going to your heirs or nominated beneficiaries. This was recently discussed by a group of very successful people and the consensus was the same as mine.
    Anonymous
    19th Sep 2016
    9:18pm
    Well - they must have been extremely lucky to be successful - because they certainly never learnt anything about Australian law.
    Rodent
    18th Sep 2016
    5:49pm
    Something to ponder?

    What is a Self Funded Retire? What is a Pensioner? How do individual People become either? Is it possible that a current Pensioner can choose to become a SFR? Can a SFR become , or chose to become a Pensioner?

    I will give you a clue- in my Golf group of 8, all Retired, all over 65 Male, there are only two who "claim to be FULLY self funded retirees". What do they have in common? They have more Money/Assets/Investments/Property than everybody else in the group- Although Eligible for the Age Pension they choose not to apply- and they would be ineligible anyway because they have to much $ in assets

    Rightly or wrongly Financial Advisors are still helping clients to maximise their Pension Entitlements- that's there term not mine!

    As somebody often says - Tread your own path
    Old Geezer
    18th Sep 2016
    5:58pm
    Before applying for the OAP people should know the rules that apply. If you know the rules then you will know if you are eligible or not. So why apply and let Centrelink know all your business if you are not eligible? Wise move on your golf buddies.

    Unfortunately all the financial advisors I know fail to see the big picture and concentrate on the OAP as the holy grail. Some people would be better off not on the OAP at all.
    Anonymous
    18th Sep 2016
    7:06pm
    Rodent - I never had a financial advisor as I could never see their value - until one day I tripped over one who showed me he knew all the tax rules of the day - of which there were many.

    I paid and learnt from him and then sacked him a few years later once I knew what he knew and more. He was useless at investing - but the trick to success was in understanding the tax rules and about different tax vehicles.

    Tax rules can be used by almost anyone at some level - my experience is similar to your golf group Rodent. The difference between those who have more money in retirement - or not - is the advice and understanding about taxes, tax vehicles and investing that those with money sought - compared to most others. It takes hard work and persistence to learn how make money AND keep it - it's very much easier to spend it.

    People with more money usually take the position that they can use their money better than the government - so only pay them the minimum tax they legally owe (Kerry Packer). Even though lower paid workers could do the same - few take the opportunity. By the time we reach retirement - we then start looking harder at the 'luck' of the top 5%. The top 5% however were making their 'luck' by learning the rules about investing when they were much younger.

    Once you exceed the pension thresholds - you can't get any pension money - regardless if you have the world's best advisor - or not. You are on your own until you run your assets down to meet the pension thresholds.

    But I think most SFR's would say they hopefully NEVER reach that point and have to deal with Centrelink, etc.
    Old Geezer
    18th Sep 2016
    8:19pm
    Reasons I agree. Money, tax and investing are all about learning the rules and then using the rules for your benefit. If a financial advisor could do all this I would wonder why they were working as a financial advisor? Most are just sales people for managed funds with only a limited knowledge of what they are invested in.

    I still spend time learning the rules and how they work. The changes in super last week still have unanswered questions for me but hopefully when they get passed byt he government those questions will have clearer answers.

    I am personally known by most of the local Centrelink staff as I assist people with issues with them from time to time so I know how frustrating they can be to deal with.

    There is no such thing as luck...it is simply called good management. You make your own luck thorugh persistence and hard work with lots of stuff ups along the way.
    Circum
    18th Sep 2016
    8:47pm
    Sad to read that some people see the tax/superannuation system as a game to manipulate and better their own situation at the expense of others who may not be as savvy in using the rules to their advantage.A system that requires one to prey on the weakness of the system for personal benefit is a poor system and an unfair system which seduces individuals to believe the system will look after them.Then they hear comments like,you need to play the system smarter.
    Currently the system is not fair and heavily biased against the middle class to such an extent that I haven't witnessed ever.A couple with more than $820000 is considered rich and deprived of any pension yet a couple with almost 3200000 still need government support in tax breaks.Give me a break
    Anonymous
    18th Sep 2016
    9:19pm
    Circum - whether you like it or not - the tax rules are made by the ruling elite to ensure you pay as much as they can get from you.

    As an Australian the ATO encourages you to minimise your tax by any fair means - but not AVOID tax using illegal ploys.

    I can assure you the same elites who make the tax rules are legally minimising their tax by all possible means.

    Those who choose to learn about and use those rules benefit. They are not hard to grasp by anyone - and even low income users can benefit - but rarely do as they don't take the time to learn.

    They then claim the system is biased to the rich.

    These days $60 worth of books or the internet for free and a significant amount of time learning will get the poorest person as smart as most rich people - believe me.

    The elite are betting the majority take your view of tax breaks and don't do the hard yards and learn - and then happily extort the maximum tax they can get from your willful ignorance.

    The tax rules are there for EVERYONE TO USE - the elites are confident most won't learn and use them - and in 95% of cases - they are usually quite right.
    Anonymous
    18th Sep 2016
    10:02pm
    Circum - I know it sounds odd that a couple with $320K can get the full pension - but my guess it is done for a number of reasons - none more so than the government knows the pension rates are too low..

    It forestalls people getting paid the full pension - gives people a buffer from poverty levels - gives people a higher level of spending ability and therefore pumps up the economy - probably provides a better base for people going into aged care therefore lowering government costs.

    If all assets had to be used before a pension was allocated, it is possible that the depletion could have highly detrimental effects on real estate and shares.

    Of course there is also political pressures on being too generous that will also be in play.

    It's an interesting government policy area that I am sure keeps someone in government awake.
    Old Geezer
    18th Sep 2016
    10:18pm
    There is nothing unfair, wrong or anything else about people learning the rules to play the game. That's why we have rules so people can play the game. If you don't learn the rules and play the game you are doing yourself a disservice. You don't play any other game without knowing the rules so why play the game of tax, super and investment without knowing the rules. You don't drive a car without knowing the road rules as to do so is foolish and could be at your detriment.

    The system is fair to everyone and it is simply foolish to think otherwise. You have no one but yourself to blame if you think the system is biased against the middle class or any other class.

    You are also comparing welfare with people who have used good management to put themselves in a situation whereby they are able to look after themselves financially. You cannot compare these two as they have nothing in common. In fact one provides so that one does not live in poverty and the other provides for a decent retirement for persistence and hard work.

    If you don't look after yourself then how can you expect others to look after you with little or no effort by you. Stop whinging and get out your posterior and help yourself to a better life.
    Rae
    19th Sep 2016
    10:18am
    Reasons you are not comprehending well.

    Circum said a couple with $3 200 000 ie $1.6 mil each got a lot of tax concessions and that is correct.

    I do believe the re contribution rules need to be changed.

    Tax concessional amounts should be taxed if not spent during retirement unless going to a dependent child.

    The whole idea of re contribution to avoid inheritance tax is simply wrong.
    Anonymous
    19th Sep 2016
    10:41am
    Rae - Yeah it was late and I can't count that many zeros - much better written $3.2m

    You will be pleased to know it is a lot harder now to wash out the tax component if it was all concessional as the non-concessional amount is limited to $100K per year.

    The most tax you can wash out now is $800K before you are 65 using the 3-year bring forward rule - it was $540K - that made it easy.

    You can change the recontribution rules - but if you move it all out to a non-super environment all tax is instantly removed - most people would do just that if they got sick or older.

    The sad fact of life is that the reason people with money have it in the first place - is they just work within the tax and other rules to ensure they protect and grow what they have.

    You just have to come to grips with the fact that it is legal to minimise tax and there are ways to do it -and anyone interested in growing or protecting their assets are going to use whatever legal tax rules are available to do just that.
    Anonymous
    19th Sep 2016
    11:13am
    OK Rae - try this out and see who wins the tax game.

    A highly paid person at 35 decides to have $1.6m at 65

    They put the maximum $25K per year of concessional contributions.

    Compounding this at 5% per year would mean they can achieve this over 30 years of contributions.

    Lets assume they should pay 42% tax but get that $25K at a 15% tax concession.

    They should have paid $10,500 tax - but only paid $3750 - a difference of $6750.

    They get this annual tax break for 30 years as mentioned - so they get a total of $202,500 of tax concessions.

    At age 64 they are self funded retiree - and get no more government welfare.

    A pensioner who lives 20 years after retiring - which is actuarially likely today - gets $454,428 in government welfare payments - PLUS medical expenses.

    The poor pensioner gets $251,928 MORE government money than that evil, rich, rascally tax dodging bastard.

    AND - that excludes all the pensioners health costs covered by the government!

    So Rae - give me a break about the rich and their tax concessions when it comes to super.

    It won't stack up when compared to the tax payers costs for pensioner's benefits - even if they are not getting the full pension.
    Circum
    18th Sep 2016
    11:25pm
    Reasons and Old Geezer.You guys don't get it do you.You both seem to think that its a game and its all about YOU and how YOU can use the system to your advantage.Whether its fair or not is irrelevant to you.
    A few points of clarification.
    _I agree Reasons that the rules are made by the ruling elite who will also use the rules to their advantage but that doesn't mean its right.
    -I object to your implication that low income earners are ignorant by not learning how to manipulate the system.Thats poor form old man.
    _$320k wasn't mentioned by me.I was talking about $3.2 million.I agree $320k is a low figure.
    Old Geezer,you comment that I have no one to blame but myself if the system is biased.What sort of comment is that?I am not an MP who can try and change the rules.
    You do not understand what I am saying you old geezer.Possibly cause it contradicts your view.
    I am not comparing people in any way other than saying some see the system as a game to profit by if they are in a position to do so.You seem happy to concede you are in that category.
    My critisicm is of the system which gives an unreasonable advantage to the wealthy (nothing against wealthy) with the latest changes.As agreed by most experts which you would know if you kept in touch with the news.
    Anonymous
    19th Sep 2016
    7:52am
    Circum - I think I get where you are coming from - and you are altruistic in your views.

    If you are taking the view that all tax monies should be fully paid without question and redistributed to provide and egalitarian society, then you are possibly in the wrong country. And even one's base on that creed end up with the elites having all the money (China is a great example)

    Tax is NOT a game - minimising tax is just ONE strategy in a raft of strategies that people use to accumulate assets/wealth.

    Everyone in Australia has the right to LEGALLY minimise their tax. If you choose not to do so - fine - you just have to remember that many of us don't consider the government to be a smart user of tax money - and minimise accordingly - including the elite tax rule makers.

    Go to the ATO site (god it's boring) THEY give you ideas about minimising tax. You can ring them and they will give you feedback about your ideas about minimising tax.

    If I have you figured correctly - you consider that tax monies should be paid without question and be redistributed for the good of society.

    If that is true, I get where you are coming from - but to use Morrison's aspirational term - the people you despise are just that - aspirational - and they are legally using the tax rules as just one part of their strategy to build assets and retire comfortably, etc.

    You just have to realise that people think differently and have different aspirations and views of the world.

    One can take the high position and disparage those who aspire to create wealth - but they are going to do it regardless of the views of others - AND who can say they are wrong if they then don't need any government monies for 20-30 years in their retirement?
    Not Senile Yet!
    19th Sep 2016
    12:00am
    Most people want the Superannuation Contributions tax concessions to be put to the Same Asset Tests as the Aged Pension....anyone over......NO TAX CONCESSIONS!
    Tax Concessions......are for those in need....not for those who do NOT need them!
    Anonymous
    19th Sep 2016
    6:39am
    Not Senile Yet! - it won't ever happen - super will eventually replace the aged pension to a large degree - therefore reducing the government's welfare costs.

    The super guarantee amount of 9% is still too low for people to be financially independent - the Libs seem to be blocking that - possibly because they need more spending to keep the economy afloat - and worry about the costs later.

    All parties know there is no point killing super as you are suggesting - as it will blow their welfare budget to hell in the future.
    Anonymous
    19th Sep 2016
    7:22am
    Circum - I think I get where you are coming from - and you are altruistic in your views.

    If you are taking the view that all tax monies should be fully paid without question and redistributed to provide and egalitarian society, then you are possibly in the wrong country. And even one's base on that creed end up with the elites having all the money (China is a great example)

    Tax is NOT a game - minimising tax is just ONE strategy in a raft of strategies that people use to accumulate assets/wealth.

    Everyone in Australia has the right to LEGALLY minimise their tax. If you choose not to do so - fine - you just have to remember that many of us don't consider the government to be a smart user of tax money - and minimise accordingly - including the elite tax rule makers.

    Go to the ATO site (god it's boring) THEY give you ideas about minimising tax. You can ring them and they will give you feedback about your ideas about minimising tax.

    If I have you figured correctly - you consider that tax monies should be paid without question and be redistributed for the good of society.

    If that is true, I get where you are coming from - but to use Morrison's aspirational term - the people you despise are just that - aspirational - and they are legally using the tax rules as just one part of their strategy to build assets and retire comfortably, etc.

    You just have to realise that people think differently and have different aspirations and views of the world.

    One can take the high position and disparage those who aspire to create wealth - but they are going to do it regardless of the views of others - AND who can say they are wrong if they then don't need any government monies for 20-30 years in their retirement?
    Rodent
    19th Sep 2016
    1:45pm
    Reasons

    Re your clarification
    Sorry - it's from Jan 2017

    This is simply NOT CORRECT - that's just the BS the Govt said in its media release. There are SOME Existing Pensioners that will get an Increase after 1 Jan 2017, BUT this will depend on the INCOME test and their specific components that are included, and their values. These changes were made to ONLY the Assets Test, NO specific mention was made of the Impacts for SOME people as MAY be determined by the UNCHANGED income Test.

    Of the existing Pensioners who WILL get an increase, in fact the largest INCREASE is a Couple NON Home Owner with $600,000 in Assets who will get an INCREASE from $28,454pa to $32423pa, that = $3969 pa or $152 Per Fortnight- and these are the EXCEPTION
    Anonymous
    19th Sep 2016
    9:22pm
    Rodent - I won't argue with you - I just loosely follow pension changes as I am interested to understand what is happening on a range of fronts including social effects.
    TMac
    20th Sep 2016
    12:16pm
    Lets get the facts correct here... the $100k is an annual LIMIT so people can still put in less than this amount and any amount that is put in is good for your super balance. Also the money is non concessional which means an earning tax payer has already paid tax on it at their marginal rate and in the case of the high income earners this is up to 50%.