Are we missing the real purpose of superannuation?

Does the current proposal to enshrine super's purpose go far enough?

Man confused about superannuation

It seems that the financial services industry is in furious agreement that the purpose of superannuation needs to be enshrined in law, however, does the current proposal go far enough?

In accordance with the recommendation from the Financial Services Inquiry, the objective of superannuation, ‘to provide an income to substitute or supplement the Age Pension’, will be enshrined in legislation but the Government is being urged to go one step further by NAB-owned MLC.

In the third part of its Australia Today white paper, which is a study of 2000 people conducted by IPSOS, MLC argues that the over-arching aim of superannuation should be to enable and encourage people to save enough for an adequate income in retirement.

When interviewed, Paul Carter, MLC’s Executive General Manager of Superannuation and Investment Proposals, said; “We applaud the major political parties for their commitment to legislate the objectives of super.”

“However, those objectives must be clear, measurable and robust to ensure they target an adequate replacement income in retirement to mitigate generational inequity and gaps in living standards as well as costly and destabilising interventions into the future,” he said.

“Superannuation has been the subject of political whims for too long. The end result has been constant tinkering, or significant unanticipated change, which has left Australians feeling uncertain about their retirement.”

The research also shows that 66 per cent of Australians feel ‘slightly or not at all’ prepared for retirement, with only 15 per cent claiming to be ‘very well or fairly well’ prepared. Women, who retire with 40 per cent less super than men, were more likely than their male counterparts to feel unprepared – 74 per cent compared with 57 per cent of men.

Knowledge, it appears, is also power, with 35 per cent of those who used financial planners reporting feeling ‘very well/fairly well’ prepared for retirement, compared with nine per cent who sought no professional advice at all.

And the goal of living in retirement without government support is still some way off, with self-funded retirement considered achievable by only 54 per cent of respondents.

What is perhaps of most concern is the fact that retirement doesn't feature very highly when a windfall comes into play. When asked what they would do with a hypothetical gift of $50,000, most respondents would put it towards their mortgage, add it to savings or take a holiday.

Read more at MLC.com.au

Opinion: Let’s get back to super basics

Some 24 years after our superannuation system was first introduced, a system that is now worth $1 trillion, we’re still debating its intended purpose.

How, then, if we don't fully understand the purpose of the main vehicle for saving for our retirement, can we be expected to put our faith in the system?

Surely if the original purpose – to supplement the Age Pension – was honoured in a simpler system, along with the intention of providing a 15 per cent superannuation guarantee to workers, then superannuation would not only deliver a retirement income to those who need it, it would also not need the constant tinkering and legislative changes that we are forced to endure.

In the haste to address seemingly ineffective aspects of superannuation policy, we now have an unwieldy system that is open to abuse by those wealthy enough to do so. Superannuation has become a cash cow or tax haven for those unlikely to ever need to claim an Age Pension. And of course, the nation has been forced to forgo the much-needed associated tax revenue; money that could well be used to increase the meagre Age Pension for those who do rely on such an income.

Now, more than three months on from Budget 2016/17, when promises were made to address the unfair inconsistencies in superannuation, it appears we have a government that is willing to tinker further with the system.

What appears to have been overlooked from the Financial Services Inquiry – in the interest of sound bites – is that the value of the superannuation system to individuals and their retirement incomes needs to be lifted. This can only be achieved if the Government starts with the end in mind – not jumping in and out, changing policy and legislation as it pleases.

What do you think? Is super too complicated? If guarantee contributions had been increased to the original 15 per cent, would it have made a difference to your retirement savings? Do you have any confidence in superannuation as a retirement savings vehicle? 

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    COMMENTS

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    23rd Aug 2016
    10:17am
    One of the reasons that a lot of Australians don't feel ‘slightly or not at all’ prepared for retirement, is the numbers being thrown about by sections of the media. The first thing people approaching retirement should be to work up a budget that suits their needs. When this is done, a good financial adviser can then assess exactly how much is needed to support the proposed budget. Yes, there are people who need in excess of $1M to fund their retirement but I contend that this number is quite small compared to the rest of retirees. Each situation is different and the media is trying to promote a "one size fits all" scenario which, I believe, is misleading.
    Anonymous
    23rd Aug 2016
    12:13pm
    I agree OM - say you had the rough minimum assets (~$300K I think) for getting a full couple's pension you could supplement you pension with an additional $10K per year for 30 years.

    You can live comfortably on ~$44K per year - even travel to some degree assuming you own your own home. If you don't think you are going to live that long you can up the $10K and gain a better lifestyle.
    Rosret
    23rd Aug 2016
    12:47pm
    When you are self funded there should be no-one telling you that you have to live on $xy per annum. The average working salary is around $90K. Dual income $180K. -and if you are a baby boomer you are probably helping out your adult children in a crippling real estate market.
    So to retire on $44K a year is a poorly salary and with inflation it will be even worse in 20 years.

    With 5% compound on the $1m reducing the portfolio in yearly amounts over 20 years you can give yourself an income of $80K on today's values.

    If you like this generation are living into their mid nineties then reducible annually for 30 years estimating 5% compound on the $1m you can live on an income of $65K p.a.

    Now before you say, wow that's lovely. In 1974 an average salary was $8K in 2004 $80K so image what your $65K will be worth in 2047.

    Pensions and paid super funds are indexed with inflation - just what compensation does the government want to give those of us who are actually not asking the government for anything other than to BACK OFF.
    Anonymous
    23rd Aug 2016
    2:01pm
    Rosret - no-one dictates how much you can pay yourself per year now from your super once you are over 60.

    BUT - if you don't average it out over 'x' years of retirement - life could be a bit glum at some point when you have nothing left except for the pension.

    If you plan to live to 90 - it just means you CAN'T take out $80K per year initially - you have to let it compound harder by taking less earlier.

    If you don't - you answered your own question - inflation will likely get you at 90.
    Old Geezer
    23rd Aug 2016
    2:32pm
    If you take out less than it earns every year it should continue to grow enough to take care of inflation until you are well past 90.
    ex PS
    24th Aug 2016
    12:26pm
    I found that as I had just had a new house built I was taking out more than I had anticipated. Now that the orchard is established, the landscaping is done and all the water tanks are in, I am finding I need less than anticipated, so I leave the extra in the account and will replace the funds expended earlier.
    All of the things including the house that I have spent money on will eventually help lessen my overall cost of living.
    Old Geezer
    24th Aug 2016
    12:45pm
    We have been eating citrus from our trees for about the last 4 months and giving heaps away so a few fruit trees helps. We also have solar power and water tanks for the gardens which also saves heaps. Veggie patch produces a nice harvest as well.
    Anonymous
    25th Aug 2016
    10:28am
    If people put a bit more thought into retirement (years before retirement) maybe they would be in a better financial position when the time comes.
    Adrianus
    25th Aug 2016
    10:32am
    Pepe, that is far too logical for a creative mind to grasp. That is why we had to force it onto people.
    ex PS
    25th Aug 2016
    12:42pm
    I had a very good Super Scheme, as part of being a member the company held many free seminars about planning for retirement, the key was very much about planning for retirement, which as recommended I did for several years before I left. I have not had one boring day in the 4 years I have been out of the workplace and I did not have to spend a fortune to achieve this.
    The biggest problem I have is how to keep the local thieving Cockatoos from striping my Almond tree every bloody year.
    Old Geezer
    25th Aug 2016
    5:04pm
    I went to a weekend seminar on how to plan for retirement about 10 years ago. I sat there gob smacked and thought do people really have to be told this stuff as I have been doing what they teaching for years. By that stage I had already reached a level at which I made enough money while I slept as I had been working on that plan for quite awhile before.

    Just thinking today it's wet again and the mangoes are starting to flower. No mangoes early next year again.
    Dan
    23rd Aug 2016
    10:25am
    The federal government should start with reductions to the overgenerous pensions to all their politicians and public servants , then State governments reduce the ridiculously high government funded pensions to State and Local government public servants . There is plenty to reduce for so called balance and fairness treatment before they start wacking self funded retires who pay save and fund their super themselves The proposes life time cap of $500,000 by retires who use their after already taxed many is far far less than what is required to live off and far less than the overgenerous non funded government pensions
    Farside
    23rd Aug 2016
    11:16am
    Can you provide an example of the ridiculously high government funded pensions to State and Local government public servants?
    Sundays
    23rd Aug 2016
    11:55am
    Dan, perhaps you don't realise that public servants pay 5% of their own after tax pay into super. This is compulsory. Had they been able to invest this money outside super all their working lives they would have a lot more money than their 'over generous' pensions.
    Rae
    23rd Aug 2016
    2:58pm
    Dan if you paid the same after tax contribution into a balanced fund as public servants do you too could end up with a nice nest egg. By the end of their career in some cases it is nearly 30% of after tax salary.

    I was stunned to realise the average nurse could have bought at least 6 houses from 1970 until retirement using just that amount and negative gearing and rents. In comparison the State Super Funds have made dismal returns. For a very long period during the 80s it was 3% every year with no explanation as to how that was possible. According to rumour the governments were using the funds to even out revenue.
    Dan
    23rd Aug 2016
    3:45pm
    Yes , Brian, Sundays and Rae I refer to those that were members of NSW SASS and First State super funds and NSW local Government super funds that offered their contributing employees "matched " Government employer contributions of up to " six times the amount contributed by employees" If that's not overgenerous Government funding ,then I do not know what is . good luck to the ones who took advantage and put in their hard earned I would have loved to have had deals any thing like that in private employment even 3 times my contributions would have been more than generous There are not many super schemes outside the public service that have more than the standard superannuation guarantee super levy paid eg 9 and 12 % etc
    As for politicians I would hope you would agree they are over paid in respect to salaries , pensions , allowances , travel and accommodation allowances in wife owned units etc etc
    Old Geezer
    23rd Aug 2016
    3:53pm
    NSW SASS was a generous defined benefit scheme but the other 2 you mentioned were just ordinary super funds. I have had dealings with all 3. When you retire you are required to take your money out of SASS and either pay tax on it or put it somewhere else. Once you got to a certain level with SASS if you put in more you didn't get any employers contributions.
    Farside
    24th Aug 2016
    9:48am
    Dan, I guess you are talking about a long time ago in the case of the NSW examples. You may not be aware there were many generous defined benefit schemes in the private sector also. At one time my super was increasing by a cumulative factor of 0.15 multiplied by seven times final average salary. It was replaced by defined contribution schemes with matching increased contributions similar to those currently available in the public sector.
    ex PS
    25th Aug 2016
    12:51pm
    Dan, as has been said, there is little difference between government Super funds and the ones used by Private Enterprise. As far back as 1990 when I joined the service your payout was determined by how much you put in and a formula that multiplied your final average salary by a percentage of the years served (Defined Benefit). The Defined Benefit has been phased out in my State so now the Public Service is on par with most Private Enterprise establishments.
    Old Geezer
    23rd Aug 2016
    10:25am
    The only purpose of super as far as I am concerned is that it is a tax effective vehicle for my investments.
    cdbstock
    23rd Aug 2016
    10:40am
    Superannuation is very complex & inefficient to legislate & administer (ATO, Centrelink, SMSF, lawyers, accountants). Why not as elsewhere suggested pay every aged retiree the age pension - no testing, no super (supported by tax etc)? If a person can & wishes to supplement the age pension by personal private investment income without tax incentives - well & good. But then the age pension must be sufficient to enable non-home owners to live at an acceptable standard in an acceptable area (hospital, aged services)
    The savings (tax, administration etc) would be sufficient.
    Old Geezer
    23rd Aug 2016
    10:43am
    Super is not complex at all if you stick to the basics and don't try to do something out of the ordinary. My SMSF is a lot cheaper than if my money was in any other sort of super.
    Rae
    23rd Aug 2016
    3:11pm
    That would certainly be fairer. At the moment there is little fairness at all. Some workers have been forced into expensive defined benefit funds with little control of outcomes, other PAYG workers are forced to choose an industry, commercial or SMSF fund and hope the employer does the right thing, self employed, contractors and business owners can choose whether to have savings in superannuation at all and many don't and then the government changes the rules and regulations and requirements each budget, Even retrospective changes have been made.Divorce creates havoc with planning. It is a dog's breakfast and it should have worked.

    I agree pay everyone the same amount and tax all other income.

    As it is I believe we will see an increased GST and land taxes before to long. The government is in big trouble with it's fiscal policy.
    cdbstock
    23rd Aug 2016
    5:33pm
    Tks Rae - no others??
    GeorgeM
    23rd Aug 2016
    8:41pm
    Agree, cdbstock and Rae. A lot of unnecessary expenditure for reviews by experts, and costs by Centrelink admin, would be saved by such a simple approach, i.e. "pay everyone the same amount and tax all other income." - maybe qualified by a minimum tax-paying history in Australia so that we don't encourage migrants using this as a carrot.
    East of Toowoomba
    23rd Aug 2016
    10:51am
    Perhaps if they restricted the age at which the person could access their super to the same age as they can access the aged pension (68 years approx) then it really would be a viable alternative to the pension.

    At the moment you can withdraw from Super as early as 55, and if not managed carefully or if there's not much of a balance there, it could all be spent by the time the person was old enough to actually need a pension.
    Old Geezer
    23rd Aug 2016
    10:55am
    I can't see anything wrong with that at all.

    If you are 55 and can't get a job Newstart is not going to be enough for you to survive so why can't you access your super instead?
    East of Toowoomba
    23rd Aug 2016
    11:04am
    Hi Old Geezer, I see the value of using your Super instead of Newstart but the point I was trying to make was that by restricting the age you could access Super, fewer people would use it as a tax haven, what would be the point?
    Old Geezer
    23rd Aug 2016
    11:10am
    I would not have super if it wasn't a tax haven simply because that to me is the only thing that makes super worthwhile. If one can't save any other way then maybe super is for them but other than the tax benefits then what is there to recommend it?
    Rosret
    23rd Aug 2016
    12:51pm
    A lot of people are forced to retire at 55. If they have the money in super the government insists they access it before giving any financial support.
    Rae
    24th Aug 2016
    8:31am
    OG is correct here. Superannuation is only a tax minimisation vehicle and a means to force all PAYG workers to save 9% of income.

    The real winners are those in the financial services industry which is being paid billions from hard working wage and salary earners.

    All other Australians can choose whether they put funds into a superannuation fund. If the tax savings beat the fund costs then it makes sense.

    PAYG workers are being treated as little children that need Big Daddy government to make them save.

    As far a neoliberalism and libertarianism goes it is a joke.

    So much for 'free markets' and the whole LNP idea of small government. Governing people is okay providing the private sector does it?
    ex PS
    25th Aug 2016
    12:59pm
    Much the same as OG, I chose to use my Super rather than go through the BS involved with getting Newstart, I would have been financially better off going the Newsart route but I prefer to be independent. Whether or not I will have enough to last me till I decide to release myself from this life I don't know, but in my view that's what the Pension is for. One thing is certain though, I will make sure the thieving government does not get my house to pay for it.
    As far as the pros and cons of Super goes, all I can say is that it worked for me.

    23rd Aug 2016
    11:17am
    Of course people are ill-prepared for retirement and this is because the rules and regulations of superannuation keep changing all the time, so what you have planned for yesterday does not suit what the rules will be tomorrow. There is not grandfathering clauses either, so your long range strategies go right out the window to the shithouse at the government's whim. This is no different then playing a game which has its rules changed during play, or the goals moved, or the field tilted. This bloody government is playing us for fools with this superannuation scam of theirs with the end result being one of cheating us out of our savings to cover their inept financial management of taxpayers' money. This is a crime to our financial wellbeing and a total insult to our intelligence. Wake Up Australia.
    East of Toowoomba
    23rd Aug 2016
    11:22am
    I have always been skeptical about Super, there just doesn't seem to be any protection for the savers.

    My fear is that the Gov't can change the rules anytime and your contributions could all end up in consolidated revenue for distribution as a pension, paid at whatever rate the politicians of the day decide is adequate.
    Old Geezer
    23rd Aug 2016
    11:22am
    That's exactly why one should only use super as part of their retirement planning. If your investments are diversified some in super and rest elsewhere you have room to move every time the government changes the system. I actually enjoy these changes myself as it gives me the pleasure of finding better ways of doing things.
    Old Geezer
    23rd Aug 2016
    11:25am
    Exactly East of Toowoomba. I live on the income from my investments outside super and use the return from super as a bonus where I either buy something or reinvest it elsewhere.
    Anonymous
    23rd Aug 2016
    12:54pm
    I have said it before and say it again...

    Anyone who says that the rule changes in Super are a reason not to use or some new rules are making super untenable - have either not been in Super - or paid little or no heed to what successive governments have done to the rules.

    I have been in various super schemes for over 40 years and have run our own SMSF for 17 years.

    Apart from this governments' failed attempt at retrospective contribution caps - NO other similar retrospective attempt has ever been made. The rules have always changed - sometimes they have been brilliantly generous - especially under Howard and Costello - the tax rorts made available under this crew were truly unbelievable. Gillard killed them (rightly).

    All you has to do over time was to understand and exploit the opportunities various governments gave you.

    Our super rules will probably change forever - but I have watched them for over 40 years - and they are still generous and we have nothing to complain about.
    Old Geezer
    23rd Aug 2016
    1:10pm
    That said Reasons you should not have all your money in super but be making use of the tax free thresholds outside the super system as well.

    I agree the rules have always changed and will do so in the future.

    I have run my own SMSF for over 17 years too now and seen many changes.
    Anonymous
    23rd Aug 2016
    1:49pm
    Disagree OG - much easier to get it out than get money into super. You max out your super first and keep it that way - then move what you need or forced to.

    The 4% (age dependent) pension rule forces unnecessary amounts out anyway.
    Old Geezer
    23rd Aug 2016
    2:21pm
    I disagree as there is no sense in having money in super that is not causing a tax problem out of super.
    adbob
    23rd Aug 2016
    2:27pm
    Hi old geezer - you seem to know what you're doing. SMSF sounds the best way to go - even for balances of aorund $300,000 - but don't you still have to pay some shark to audit your returns.

    Even industry funds are charging >1%pa on capital - that was OK (kind of) in the days of 10% returns - in an era where returns barely keep up with inflation that's way too much.

    What's the most economical way to go with a small SMSF?
    Old Geezer
    23rd Aug 2016
    3:13pm
    It depends on what you want to do with your SMSF. Mine started out small under $100,00 so I set it up myself and found a retired accountant to do my audit for the cost of a carton of beer. Now I have a dedecated super accountant looking after all the paperwork and audit for me as it is no longer a small fund.

    There are also funds that you can select what you want your money invested in as alternatives to SMSFs. If you just want to invest in shares, manged funds or fixed interest these may be a good alternative. You don't have to worry about audits with these.
    Anonymous
    23rd Aug 2016
    4:28pm
    Adbob - an SMSF is only the vehicle, you have to do the investing on top of that or have someone advise you. The industry super funds are providing that investing layer for you.

    If you are happy to do your own investing, an SMSF can get your annual costs low.

    There are a large number of SMSF compliance services that will manage your SMSF for you more economically than an industry fund, etc...
    http://www.thesmsfreview.com.au/comparison-table-smsf.html

    I use Esuperfund - it's low cost and automated online.You are limited in who you can use for what in some instances (eg you must use CommSec) - but I do a lot of stuff and their limitations don't constrain me (I had to move from E*Trade). Don't expect them to do all the work though - you MUST want to understand how super compliance works at some level. But the more you learn the more you can leverage super tax rules. These crews do ALL compliance work for a set fee - including independent audits which are ATO mandatory on any SMSF. Pretty good at answering your tax questions also.

    There can be additional costs such as setting up your SMSF with a corporate trustee. It pays to have a corporate trustee - it is easier to change membership and you can reduce ATO penalty costs compared to an individual SMSF. It does however add additional annual compliance costs.

    Basically an SMSF lets you do anything you like investing-wise within the associated rules. You are basically managing your money the same as you would your other money - you just have to be more careful to ensure what you invest in and the way you name bank accounts for example adheres to the compliance rules.

    There are additional SMSF operational costs, so if you buy and sell shares for instance, you have to pay the buy and sell brokerage fees. There could be the usual banks fees, etc.

    So - if you get a low cost SMSF compliance provider and do the investing yourself - that is the most economical way to go with a small SMSF.
    Old Geezer
    23rd Aug 2016
    5:53pm
    I had a bit of a look at Esuperfund which looks good and I wouldn't have any trouble setting up a SMSF using it. However you would need to have some knowledge of how it all works to do it.

    My SMSF does not have any life insurance because I simply don't need it. If you need it then it would be an additional cost every year.
    Anonymous
    23rd Aug 2016
    11:03pm
    It took me a few months of reading about and comparing a bunch of online providers to eventually select Esuperfund.

    Basically you need to check out everything they offer product-wise and any associated constraints and if it does not impede your investing, they do the rest.

    It takes significantly more effort to migrate an existing SMSF compared to starting a new one - but the ongoing costs and more complete compliance understanding we were forced to gain made it highly worthwhile.

    Essentially you migrate soon after you have completed your annual SMSF tax return so you have plenty of time prior to the next financial year. Esuperfund provide a check list of everything you need to provide.

    You need to keep good relations with your existing accountant as you are likely to need compliance information from them if you have not kept copies of range of annual minutes Esuperfund requires (for example).

    We had our own SMSF accountant previously, but he used to unintentionally obfuscate compliance processes which made us uncomfortable - and he was nearly 4 times more expensive than Esuperfund.

    (We don't use insurance either - I didn't realise they offered it)
    Old Geezer
    24th Aug 2016
    8:54pm
    I was doing it all myself and getting an accountant to do the audit. When the fellow that did it for a carton of beer each year died I had to find someone else to do the audit. I tried a couple of accountants and got nothing but grief from them as they just didn't know what they were doing. I then found one that understood the software I was using but wanted to big note himself and redo everything to justify his big fee. So here I was paying an annual fee for software to do it all only to have the auditor we do it and charge me again.

    A young man rang me about another accounting matter one day and I remarked if only the audit on my SMSF was that easy. He told me they had just employed a specialist super accountant. So I asked how much and it was less than I was paying to do it myself. He had the lady ring me and she has been doing my super now for many years and the fee has not increased. I have since came across another super accountant that has the same service for a similar fee so I have a backup if things change. If I have a problem or
    want a second opinion then she is just a phone call away.

    Every year you have to consider life insurance and document that you don't need it.
    Jolly
    27th Aug 2016
    9:05am
    Adbob, just go to the E-Superfund website and have a look around, they will also answer your questions. It costs about $800 to setup and about the same each year to do all the compliance and legal stuff. You still have to do some like complete the Annual Checklist as you become the trustee, but they will guide you through all that. I have had my SMSF for about 5 years now, and have used a little bit to buy my villa(deposit). I don't have a lot of investments - due to the GFC which killed me stone dead.
    Grateful
    23rd Aug 2016
    11:35am
    Superannuation as it was intended was destroyed as an excellent "idea" when Howard and Costello started to use it as a political tool for catching votes and has destroyed subsequent government budgets at the expense of most of us.
    It is now completely out of control, being used by far too many as a great way to avoid tax by way of salary sacrificing and massive tax concessions for other investments. The "double dipping that goes on is absurd and scandalous, but, goes completely unchecked.

    Superannuation should only be used in an income form, banning all except emergency required lump sums, banning the use of superannuation funds for the purchase of investment property and equities and significantly reducing the threshold where tax concessions are applied.
    The current superannuation system and a total rort with the only ones benefiting being the very well off and fund managers.
    Old Geezer
    23rd Aug 2016
    11:38am
    I would simply not have super with those limitations and I can't see many others using it either.
    Anonymous
    23rd Aug 2016
    2:36pm
    Grateful - they are unlikely to ever do many of those things as it limits too many investment and pension options.

    Many think the same way as you - BUT anyone can benefit from super - not just the wealthy - although it is skewed in their favor. If you worry about someone else getting more benefits, you can end up doing nothing. You just grab what you can yourself and make hay while the sun shines.

    The more anyone can invest into super at a young age, the more it has a chance to compound for 40+ years. Best of all - you generally can't touch it.
    Adrianus
    23rd Aug 2016
    11:46am
    I don't know how anyone could be confused after reading the Superannuation Industry Services Act, Section 62, The Sole Purpose Test. I'm pretty sure it still exists? Strange how Paul Keating would have played a major part in formulating the SIS Act but now thinks differently after 23 years.
    4b2
    23rd Aug 2016
    12:16pm
    I wonder if Mal and his team will follow through on this election promise or put it on back burner like the Equal Rights for Gay Marriage plebiscite.
    So much for hectoring Bill Shorten to pass legislation that he has not seen. People in glass houses Mal.
    Rosret
    23rd Aug 2016
    12:16pm
    Its interesting that there is a suggestion that people don't put any windfall into super. I disagree. Remember there is a limit of $560K at the moment. There is also a compulsory draw down of 4% p.a. once you start accessing your super.
    The super funds fees are high - very high. The tax benefit is the only relief from their fees. Some years are good some years are bad. I calculated that over the years its a return of approx 5% compounded.
    I am reasonably sure our returns are what the funds want to pay us not what they have earned. Its the tax benefit that keeps us investing with them.
    Without the tax benefit I wouldn't recommend topping up super with a windfall. Real Estate has increased 50% in NSW in the last 5 years - that's massive.
    It comes at a cost though - GST and stamp duty are crippling and you need to count on huge gains.
    I feel as though we are going through an era of immense greed at the cost of the middle income earner. Its as if we have turned the clock back a century or so where those with power and control are determined to take from those who don't.
    I am not a socialist however I do believe their needs to be a leveling of the disparity between those in executive positions using their lobbying might to take from the rest of us. We have democracies to stop supposedly this and all we have now is the Senate.
    Old Geezer
    23rd Aug 2016
    12:34pm
    The fees on my SMSF are approx 0.2% per annum which is not high at all.

    The return you receive after everyone has had their cut but they have to pay you what is left not what they want to pay you. They cannot retain income like companies can.

    Real estate in NSW has only risen by 50% in Sydney and not is the rest of NSW. Some areas have even gone backwards.

    As part of the middle class I am doing very nicely so I can't understand why you think we are not.
    Rosret
    23rd Aug 2016
    12:53pm
    0.2% of $1m is $2000 a year. That hurts when they have their negative years.
    Old Geezer
    23rd Aug 2016
    1:01pm
    It also looks good when you have 20% plus years too. I rarely have a negative year. Even last year I made well over 0.2% on my SMSF.
    Rosret
    23rd Aug 2016
    1:11pm
    That sounds fairer, Reasons.
    Anonymous
    23rd Aug 2016
    1:15pm
    I agree Rosret - 0.2% is what we were paying - and it was 3 times too high.

    I changed over to Esuperfund more recently. I have a company trustee and our TOTAL annual compliance costs are now capped at $1414 - regardless of the amount I have in super.
    Old Geezer
    23rd Aug 2016
    1:21pm
    I also pay a similar fee no matter what my super balance is. I pay a bit more than a normal fund because of the derivative trading to make extra income.
    4b2
    23rd Aug 2016
    12:22pm
    No need for a debate on the intended purpose of Superannuation. Paul Keating is alive and well and would love the opportunity to explain the intent with these so called economic genius' on the Government Bench. After all they managed to extend the deficit without any help in their first three months of taking office.
    GD
    23rd Aug 2016
    12:39pm
    What I don't get is that Super was set up for retirement. Yes, but why have they [governments] capped contributions. If they want you NOT to get a pension and you have a cool spare $1m or $35,000 to put into Super then why can't you. I have a friend who was was placing the allowed $36,000 above and beyond the company super payment into his super but low and behold the government in all their wisdom changed the threshold that year to $26,000 making an over payment of $10,000 BUT and here the good part... he had to pay tax that year of $12,000 for his mistake. HIS mistake yet again another diversionary tacit by the government to fraud people out of their savings...savings that they have never had to earn and pensions that they never have to calculate because they are the government...
    Rosret
    23rd Aug 2016
    12:59pm
    Yes, I don't understand either. I think its a push from the banks to keep the money in their coffers. - and of course to tax us on earnings.
    Adrianus
    23rd Aug 2016
    12:59pm
    GD, your maths don't add up for me. The total concessional amount should include the compulsory employer contribution. Perhaps that's how your friend made a mistake?
    I agree with your point about capped concessional contributions. I also think they are too low, particularly for those who don't start getting paid a decent wage until later in life.
    Old Geezer
    23rd Aug 2016
    1:06pm
    ATO will not fine you for putting excess into super but they will bill for any extra tax you should of paid plus interest. A good super accountant should have not made that mistake.
    KSS
    23rd Aug 2016
    1:09pm
    Something doesn't seem quite right about your friend GD.

    Currently if you are over 49 you can use concessional contributions up to $35000 but this INCLUDES the employer contribution. From July 2017 it is proposed to reduce this concessional amount to $25000 for everyone and it will still INCLUDE the employer contribution. For those under 49 the amounts are $30000 reducing to the proposed $25000 in about 18 months time. See here: https://www.ato.gov.au/Rates/key-superannuation-rates-and-thresholds/?page=2

    If you make more concessional payments than the prescribed limit you are taxed at your marginal rate plus an excess contributions charge. I don't understand your friend's tax bill of $12000 on the figures you have suggested. The amounts just don't add up. If they are under 50 then they have never had a concessional allowance of $35000 and if they are over 50 the reduced amount is not yet law and won't come into effect until July 2017 if the law passes.

    Those who may get 'caught out' are those making the regular concessional payments but work through a cash system where as super works on a accrual system. This means that you could end up overpaying into the second year when your regular payment for the last month of the financial year is actually mage in the first month of the next year. You will end up with a small overpayment but not $12000 worth on $35000.
    adbob
    23rd Aug 2016
    1:46pm
    Ordinary people should not need a financial adviser. When they go to one these sharks inevitably (even if they're not getting a kickback - which they usually are) advise punters to put their money in a super product - fees to the financial adviser, disclosed fees on the capital value to the super provider. Because it's super there's no tax on the eranings - to compensate - so the goverment loses, th epunter loses and MLC and their counterparts gain - little wonder they're so keen to make input into any review.

    The small print of any outcome, to keep them happy (quid pro quo for the donations -ie bribes) they pay to both major parties, is to keep it complicated - make it as hard as possible little folk to have SMSFs (the only way past this rip-off).

    Whoever speaks of 5% compound above is living it a dream world. Too much savings are chasing too little homes - all super funds do is to buy "second-hand shares", as one super fund chief admitted in an uncharacteristic burst of honesty. The more savings chase those shares th emore th eproce goes up and th ereturn goes down - that in addition to QE etc causing bond rates to be at an all-time low (negative in some countries) and likely to stay that way for the foreseeable future.

    Paul Keating set this rubbish up - he didn't understand it - he would just have been backing his favourite adviser fo the day. ONe intelligent thing he said since then is that home loans and super savings should be matched - ie super should be invested in home loans. An obvious marriage. Home load borrowers don't want to gamble on interest rates - neither to super savers. Why can't this be done/ Simple - the banks don't want it.

    Why don't the banks want it. Because home loans is one of the main ways they create money.

    That's right. Few people understand banking. Banks don't take deposits at x% and lend the same money out at x + y% (y being their markup). They do much more than that - they create money out of thin air - but they need some solidity to back it up - that solidity is provided by the home loan borrower's commitment to repay over time - the rest is just numbers in ledgers.

    So - that can't happen becasue the banks don't want it.
    Super has to stay complicated to keep the "financial services" industry (sic) in business.
    Alternatives have to be stamped out.
    Anonymous
    23rd Aug 2016
    4:48pm
    There is a higher number of ethical financial advisers than there are "sharks". If you want a good one, take advice from those who are currently enjoying good financial advice. Yes, all financial advisers get paid and the money for that comes out of earnings from super but I have always received more money in earnings than I have paid out in fees.

    You don't seem to understand the banking system. Banks use money deposited to lend out, money deposited in cheque accounts which receive no interest, money deposited in savings accounts which pay very low interest and money deposited in the higher earning deposits including, but not exclusive to, term deposits. If banks don't have enough funds held in deposit, they need to go to the open market and purchase funds at an agreed market rate. All banks must retain a balance between funds held and funds lent and this is legislated. They don't "create money out of thin air".
    Old Geezer
    23rd Aug 2016
    6:05pm
    Banks have to borrow at wholesale rates to lend it out at retail rates. Money deposited is at wholesale rates so banks use your money to make money.
    adbob
    23rd Aug 2016
    6:51pm
    Sorry Old Man and Old Geezer - your understanding of banking is only one step away from the primitive notion that they have a box for each one of us in a safe with dollar notes up to the amount we have deposited - in case we want it back in a hurry,

    Suggest familiarise yourself with the terms fractional reserve banking and M3 money supply. That's where most money comes from. The reason various countries had to do QE during the GFC was that banks didn't trust each other any more so the money supply was severely reduced.

    Some economists and other theoreticians think all money should always be generated by governments and their central banks that way and that all banking should be done the way you think it is - only it isn't. The trouble with that is that it would leave governments free to "print" (not really print but create by electronic book entry) moneu to finance their indulgences. In a way they can fdo that sort of thing anyway with things like public-private partnerships and flogging off utilites to generate money/services today and push the liability into the future. Independent central bank regualtion (which we already have) should really be enough to control that - but the political parties would miss the "donations" they currently receive (both of them) from the banks.

    Banks create money - that's where most money comes from - regulators limit how much they can leverage their equity and real deposits to do that. Hardly anyone outside banking understands money and banking - in fact quite a few in the industry don't either. If you don't know what a repo is start there.

    I've worked in IT in banks - investment banks and international settlement - I didn't need to but I was interested in understanding what was going on all around me. It's mind-boggling and hardly anyone (least of all our politicians) understands it.

    BTW OG - thanks for your SMSF tips.
    Old Geezer
    25th Aug 2016
    8:15pm
    How I understand it banks using margins like other derivative traders in which one uses very little of their own money to access a lot of money to invest elsewhere. I used to day trade using about $20,000 of my money to borrow over $2 million to trade the world market. I did quite well but it consumed the whole day and night at times and I wanted time to spend money as well as making it.
    Dave R
    23rd Aug 2016
    3:02pm
    Superannuation is just another form of tax avoidance for the very wealthy. It's of little use to anyone else unless you know for certain that you will be able to use it one day. Remember about 25% of people die before retirement and many more only live for a few years after retiring. So why sit around worrying about how will I live when I am ninety when the chances of ever even reaching that age are pretty slim.
    Anonymous
    23rd Aug 2016
    3:21pm
    Actually...

    Actuarially speaking, about 89% of 25 year-olds will make 67 - so many of them will make 90.

    They will need to have a much different perspective on their super.
    Baby Huey
    23rd Aug 2016
    4:39pm
    Both the Government and the opposition are lying (as usual) in regards to the number of soon to be retired or retired Australians. The Treasurer and his disciples on both sides use misleading Treasury figures to spruik that only about 500,000 older Australians will be damaged by the proposed budget changes to super. The true figure is more likely to be in excess of 1,000,000.
    Why? What Treasurer did not tell us is that the figures were collected by the ATO for Treasury. The ATO does not bother to collect the numbers those 60 or over.
    It appears Australians over 60 do not exist to the ATO except when the ATO wants money from the over 60's as will happen if the Government's proposed superannuation changes are effected.
    My wife and I, after over 45 years of working our butts off in our own businesses, paying our taxes, putting super and assets away for retirement only to be decimated by the GFC and a constructive default by a corrupt bank, are going to stand back and let a Big Brother Government (Orwell 1984) and their shiny arsed incompetent public servants on excellent retirement schemes dictate to us how we are going to live out our retirement they are wrong.
    I would advise all persons who feel they may be affected to write to not only their own members but also to other Government members in both houses and especially the cross bench senators to express in the strongest terms how you are going to be affected by the proposed super changes.
    Old Geezer
    23rd Aug 2016
    5:16pm
    If you are talking about selling your business and putting money into super to save CGT then I have been told nothing has changed.

    For me personally there are more positives than negatives in the super changes. If I have a good year I can now save tax by putting some of the gains in super and only paying 15% tax with the abolition of the wrok test.
    Rae
    23rd Aug 2016
    6:16pm
    I do believe the public servants that might have had some experience and wisdom have been retrenched. The government uses a lot of contractors these days.

    No none of them care about any of us. So best to look after yourself.

    I wrote copious letters during the lead up to the 2015 legislation and the only reply was from the Labor party apologising but saying they had to help pass the legislation.

    They will betray you so trust them at your peril.

    Remember that you can earn nearly $58000 a year before tax outside super and it is sensible to keep at least two investment vehicles anyway.

    Why everyone believes all investment saving has to be in superannuation is a mystery.

    I also will be able to add to an accumulation fund still running if those changes occur and will be pleased with that. I plan to do what OG has suggested and deposit market gains from personal investments into a balanced fund.
    Anonymous
    24th Aug 2016
    2:18am
    Rae - the more vehicles you have the more accounting fees you generally accumulate.

    Keep it all in a single tax effective vehicle for as long as you can I say.
    Rae
    24th Aug 2016
    9:19am
    All my eggs in the one basket which is unavailable until 55 and tied up with 7000 pages of rules and regulations? No I don't think so.

    Besides I needed access to funds when raising my kids so I always invested savings. Surprisingly I can make $3 or more for every $1 my super fund makes and that includes paying tax.

    Someone has to pay for all the public goods and services and the private system won't.
    Rae
    24th Aug 2016
    9:19am
    All my eggs in the one basket which is unavailable until 55 and tied up with 7000 pages of rules and regulations? No I don't think so.

    Besides I needed access to funds when raising my kids so I always invested savings. Surprisingly I can make $3 or more for every $1 my super fund makes and that includes paying tax.

    Someone has to pay for all the public goods and services and the private system won't.
    Anonymous
    24th Aug 2016
    10:15am
    Rae - I understand and did the same before retiring and used every trick in the tax book including our family trust.

    I am confused - if you are doing much better investing outside super it means you are using an industry fund or similar for your super.

    Why haven't you established your own SMSF so you get the investment results you want with your super money?
    Old Geezer
    24th Aug 2016
    12:41pm
    I was doing well outside super too but my super was going no where about 20 years ago. So I thought even though my super balance back then was less then $100,000 I could do better myself. So I set it up myself as cheaply as I could back then. Best move I ever made as it has grown an awful lot since then.

    Things have changed since back then and there are now very cheap ways of setting up a SMSF with lots of assistance.
    adbob
    23rd Aug 2016
    7:04pm
    The present (applicable from 1 January 2007) assets test clawback is so harsh that the excess of a super balances (for a single person) over about $300,000 is worthless - you forego your age pension and live (at the same level) on your own savings until it is reduced to (currently) $250,000.

    Before long people in their early 60s will realise that and retire early with a view to going into retirement on a full age pension topped up by whatever $250,000 in super returns them. Working to increase that balance will be a waste of time unless you can see your way to getting it up to well ofer $1,200,000 - at which point the tax break on the earnings might be worth the age pension foregone.

    Between those amounts you'll be working for little or no return.

    When a lot of people eventually realise that and start acting accordingly expect further changes. The squeezed middle will always be slugged - they are numerous and they are unrepresented politically. ACOSS is always campaighing to increase the basic rate - the LNP are in it for their rich mates and the "financial services industry" - the Labor Party - well there isn't one any more - the Greens (virtue signallers) are in the AOSS camp. Who's looking out for the little guy who wants to do just a bit better by dint of his own hard work? Nobody.

    Welcome to the fair go lucky country. BTW don't forget - that quote ends "... run by second-rate people who share its luck." - share with each other tha tis - not with Joe (or JIll) Average.
    Old Geezer
    23rd Aug 2016
    7:22pm
    Come January 2017 the current asset test will be history and quickly forgotten as people apply the new asset test rules. I agree with the asset test as the current one is way too generous as couples with a $1 million plus should not be getting any pension at all. After all the pension is welfare so that our old folk don't live in poverty. Assets of a million dollars are not living in poverty. If you can't get at least the same income as the pension gives you on this amount of money then you are not investing just packing your money in lazy assets.
    adbob
    23rd Aug 2016
    7:43pm
    The mantra "pension is welfare' is a recent invention. Up until 2007 retail super providers were showing you how to *top up* your age pension with your super investment. The capital value of complying income stream products only counted 50% towards an assets test which was much less severe. The whole thing was constructed with the intention that the average person would *top up* their age pension with their super.

    It is only in recent years that ordinary people with modest savings which they had accumualted with that in mind have been told that they must spend their own savings in order to live at the same level as those on a full age pension until eventually their own savings are reduced to the benchmark ($250,000 for a single person from 1 Jan 2017).

    Australia is the only country in the devleoped world (if indeed it qualifies for that appellation) to renege on its age pension obligations. In most countries *everyone* gets the age pension and tops it up however they can. Usually income tax is payable above a certain level. Here no income tax is payable (subject to the correct structure being followed ) irrespective of however enormous the anount of wealth might be.

    It's a stupid system and it benefits the rich and the spongers at the expense of ordinary hard-working people - and it's come to that by changing the rules after the race had started.
    Circum
    23rd Aug 2016
    10:18pm
    You are spot on adbob and you explain the facts well.The "pension is welfare"story has been pushed hard by governments to detract from their poor budgetary skills.Combined with the emotional use of the term "millionaire",the government has successfully managed to create disagreement amongst people as demonstrated in this forum.Its a bit like let them fight amongst themselves while we pick their pockets.
    The way the axe has been applied to pension asset rules has been extreme and merciless.Surely a change to reduce pension entitlements could have been signalled earlier and phased in over say 10 years.Its not as if the government didn't know the trend stats .

    The concept of everyone gets an age pension makes too much sense for our politicians to understand and be able to sell.I suspect public service unions would fight against the idea as much of the bureaucracy would no longer be required.Consultants would be crying everywhere.

    IF the government is correct in its assets test limit of $800000 odd being a sign of not requiring government support,called welfare,then it would seem logical and consistent that a person should not be permitted to have a balance of more than $800000 in their super account.To do so would be an abuse of the taxation system.
    Anonymous
    24th Aug 2016
    2:02am
    'Everyone' in SOME other DEVELOPED countries gets a pension - because the government has setup a formal and very specific social security system that everyone pays into and then gets back a certain amount at a certain age.

    Australia never went down that path - it funds pensions from annual tax revenue only. There ain't no pension fund - basically it's just a social contract between the old and young that says the young will allow 'x' amount of their tax revenue to be used for pensions.

    The Australian pension from the outset in 1908 has been means tested and was designed to ensure no-one lives in poverty. Nothing has changed much since then. You had to use your own resources up first even back in 1908 - and if you had too much - you got no pension.

    Instead of fruitlessly swimming against the tide and extolling the virtues of endless spending on universal pensions and welfare - would it not be easier to focus your energies on the existing pension, super and tax rules - so you can maximise your benefits and have a pleasant old age?
    Rodent
    24th Aug 2016
    8:20am
    adbob and others

    Will strictly not about Super, and because some are commenting about Pensions and Assets Test, I thought I might offer this

    Media reports suggest that the govt is claiming $1.34Bill Savings in NOT paying the Energy Supp to NEW pensioners as from 1 Sept 2016.
    This is part of the $6.5Bill in savings that they will include in their Omnibus Bill. I find this "interesting as it would mean a significant increase in the Total Numbers being paid Pensions and related Social Security Payments.
    Over the time period involved that would require an increase in people paid of between 740,000 and 1,100,000 people. That may be OK, BUT from June 2015 to Dec 2015
    the DSS Demographic data shows a DECREASE of 94,695 in total numbers of people paid.
    Maybe somebody should ask what is the basis of the $1.34Bill claimed savings over the 4 year period?
    Of course this is on top pf the claimed savings for the Asset Test changes which were originally $2.4bill
    Old Geezer
    24th Aug 2016
    3:02pm
    Carbon tax has gone so the Energy Supplement should have gone with it. The sooner they get rid of it for all the better we will all be.
    Anonymous
    24th Aug 2016
    5:27pm
    You are right, Adbob, about the stupidity of the assets test change. And it's now being widely reported that it is driving house prices up as retirees realize the only way to qualify for a pension that will give them an income equal to that of people who saved much less is to upgrade their housing. It's insane! The message to younger Australians is ''don't save more than about $400,000 (for a couple), unless you can get to the point of having well over $1 million in RETURNING assets, or achieve very high returns.'' There will be far more people on pensions because folk who would have been content with a very small part pension will now rearrange their affairs to get more government money, since clearly many with around $830,000 will have incomes far below the incomes enjoyed by pensioner couples with half that in savings.

    This notion that people should be forced to live on their savings is ridiculous. Why would anyone want to go without luxuries to save so that they can then hand it all back to retirees who didn't go without those luxuries, so saved less? The idea that the taxpayer should benefit from the endeavours of private individuals is completely inconsistent with the rant that we hear whenever tax is discussed! People don't want the government dipping too far into their earnings, yet they are content to suggest that those who saved, but were not fortunate enough to make over $1 million in returning assets, should be stripped of the benefit of their endeavours. It's nonsense! And it's economically damaging, because there will be far more pensioners drawing far more from the public purse as a consequence.

    If investment rates rise over time, all those younger retirees who might otherwise have become self-sufficient with rising returns, having been forced to drain their savings, will continue to be a drain on the taxpayer.

    I have no issue with the idea that those who can support themselves adequately should do so. But if there is no reward for effort, effort ceases. If the only way to maintain a decent lifestyle is manipulation, manipulation occurs. And assets do not provide a fair measure of ability to support a lifestyle, because the less advantaged in the community will receive far lower income from the same assets, and the assets test fails to pay any attention to future need - which is what we all save for.

    I've seen all the wild assumptions from the holier-than-though ''I'm alright bugger you Jack'' brigade, but they are ASS-U-MEs, and they make total asses of those who make them. The fact is that you need $1.12 million, at today's average return rate, to achieve a comfortable lifestyle in retirement. The fact is that with only $820,000, for a couple, you are struggling to achieve the lifestyle of a full pensioner and will be far, far worse off than full pensioners with maximum allowed assets. That means there is no incentive to strive for self-sufficiency, and that's even more economically foolhardy than tax rates that reduce incentive.

    There are other ways to achieve the goal. The assets test change WON'T achieve it. It's illogical, unecomonical, cruel, patently unfair, and JUST PLAIN WRONG. If people want to claim that $820,000 is enough for a couple to be self-sufficient, they should be prepared to SHOW THEM HOW. Include some provisions in the act to recognize special needs and exceptional circumstances and provide access to reliable, honest guidance for those who haven't had the educational and social advantages enjoyed by those who achieve good returns on their investment. Stop working on assumptions and deal with the FACTS, recognizing the realities of the lives of people how haven't had the advantages others assume are universal.
    Rodent
    24th Aug 2016
    5:30pm
    OG so what you are saying is that NO existing or New Pensioner should receive the Energy Supp either Now or in the Future!!

    If that did happen for existing pensioners to LOSE their current supplement this would result in an EXTRA $1.8Bill to $2.7Bill in savings!!!

    At an earlier time, on these Forums I have already said this WILL happen in the life of THIS parliament, my view is its most likely to come up as a proposed change in the 2017/18 Budget. - buts that's only my view.
    Anonymous
    24th Aug 2016
    5:35pm
    Reasons, you are mistaken. Our government DID go down the path of creating a special fund to finance pensions. If the money wasn't stolen and misappropriated by dishonest politicians, there would be enough in the fund to now pay $500 a week to ALL retirees. But the money was stolen and misappropriated, and now some people apparently think it okay to rob retirees of their lifestyle in response to that theft.
    Anonymous
    24th Aug 2016
    7:16pm
    Rainey - the facts about age pension legislation from 1908 onward are on Australian government sites to read if you ever choose to demolish your conspiratorial view that there was once a cache of money for pension purposes.

    You ask how can a couple with $820K getting only 3% return and with $1K fees per year can probably draw about $70K per year until age 87 with a mixture of age pension over time.

    This is more than double the age pension!!!

    Try this calculator using 3% and $70K annualy - it automatically adds the pension on as you draw down your own assets...
    https://www.australiansuper.com/tools-and-resources/calculators/retirement-income-calculator.aspx

    I get the impression a number of people on this site think that any money they have saved should not have to be used for their retirement and the government should provide everything.

    It is not going to happen - never was - never will.
    Old Geezer
    24th Aug 2016
    8:32pm
    Agree you can live well on $820,000 in retirement. If you saved for retirement then you have to simply spend your money not just the interest on it.

    You are right Reasons the majority of people on this site have some sort of aversion to spending the money they saved for their retirement.

    It would not surprise me that the government checked Centrelink stats and thought since people aren't spending down their retirement money then we are simply giving them too much. That could have been what was behind the 2017 change in the assets test. I know as a statistician I would have come to that very conclusion myself.

    I guess people are their own worse enemy if his is the case.
    Anonymous
    25th Aug 2016
    8:53am
    It seems neither of you, Reasons and OG, have the ability to read and comprehend.

    It's not about whether or not someone can live well on $820,000 in retirement. It's about the wisdom of policy that attacks a select group of responsible planners and savers and sends a powerful message to the community that being responsible and saving carries a penalty - not a reward. It's about the MASSIVE economic damage this STUPID policy will cause over the medium to long term, as people realize that the benefit of sacrificing lifestyle is being stolen from the responsible savers and given to people who saved less.

    I support the objective. But there are sensible and fair ways to achieve it that don't send a message to the populace that saving for retirement is foolhardy and results in YOUR savings being eroded for the benefit of others.

    Much of the current generation of retirees DID NOT HAVE SUPER. Their savings were NEVER INTENDED to benefit the taxpayer by funding retirement. They were intended to provide a better standard of living in old age, to fund specific initiatives and anticipated expenses, and to leave to offspring. Now, some folk who are incapable of fairness or logical thinking assert that people should not be government-funded in retirement if they want to leave money to their kids. Why? People are government-funded in retirement after gifting their kids hundreds of thousands, or splashing on world cruises. So what you are saying is that we should NOT have any freedom to make spending and saving choices. We should all be compelled to gift earlier in life or spend up big, or suffer cruel punishment for working, saving and investing. And yet the Federal Treasurer says people NEED to work, save and invest to improve the national economy. And then he turns around and strips those who did of 25%+++ of their income, and demands they abandon their personal financial goals to gift their savings to strangers who didn't make the same lifestyle sacrifices or didn't work as hard.

    Yes, some people DO have an aversion to spending money they saved - because they DID NOT save it for their retirement. They saved it for specific financial goals that the arrogant selfish assumers on this site know nothing about and that is none of anyone else's damned business. And when EVERY Australian (other than the desperately poor) is sacrificing 25%+++ of their income for the national good, I'll agree it's reasonable for one sector of the community to have their financial future totally decimated. Until then, it's WRONG WRONG WRONG.
    Anonymous
    25th Aug 2016
    9:23am
    Rainey - the age pension was legislated to be MEANS TESTED from the outset in 1908. That meant you need to use your own money FIRST before you got the pension even back then.

    Nothing has changed - you use you OWN MONEY first today if you want to get the pension - be it super of other money.

    You need to get over it - thems the rules - and most of us understand that fact.

    If you want to give your kids money - make sure you and your partner have enough money so you can avoid touching the capital and then leave it to your kids - simple.
    Anonymous
    25th Aug 2016
    10:35am
    You are totally missing the point, Reasons. Why should those who want to use their money to enjoy luxuries earlier in life, or are able to gift to their kids earlier, be supported by the taxpayer while those who want - or NEED - to delay certain kinds of spending until later are not? This is favouring the privileged, which is the exact OPPOSITE of what we all claim the pension system should achieve. And it's economically STUPID, because it DISCOURAGES sensible planning and saving.

    No, I don't ''need to get over it''. The rules are DUMB AND DESTRUCTIVE as well as being patently unfair and often cruel, and they need to be changed. And anyone who doesn't lobby for change is a fool and an enemy of democracy - because we have an obligation, in a democratic society - to speak out when things are wrong and demand that they be righted. And the system is WRONG. You don't pay someone 7.8% to be frivolous and irresponsible when the responsible are only averaging 5% return (and often much less). It's plain common sense - (though sense isn't common anymore, if it ever was!) that all means tests should be designed to ENCOURAGE AND REWARD responsible planning and efforts to be at least substantially independent in retirement. They SHOULD NOT be designed to deny people freedom to delay spending or gifting, or to reward those who choose to spend or gift earlier in life.
    Anonymous
    25th Aug 2016
    3:56pm
    Rainey - if someone chooses to consume and give their money to their kids and then goes on the pension - good luck to them - not the retirement I would choose. They have also done what the elite and government wanted them to do - spend and increase the GDP, generate jobs and make the brand-name owners rich.

    If most of the population does not do this my guess is the economy would wobble a bit more often - and possibly badly.

    The government gives incentives to save on various fronts - be it super, negative geared houses, etc. Anyone who leverages these opportunities gets the tax breaks along the way and the accumulated assets that the profligate consumers miss out on.

    Some of us end up NEVER getting any pension payments - BUT - we as I said - those people then get the tax breaks along the way and accumulate assets that the spenders didn't.

    This is of course what gets the masses angry about the so called rich - but tough - you can't consume your cake and also get to keep it.

    So I look at it this way - the majority or the population who blow their money along the way get the pension as a reward. This is a reward that I am happy to NEVER get if I can manage my money well over the years. If my world goes to hell - well the pension is there for me to fall back on if needed - which is what it is designed to do.
    Anonymous
    25th Aug 2016
    3:56pm
    Rainey - if someone chooses to consume and give their money to their kids and then goes on the pension - good luck to them - not the retirement I would choose. They have also done what the elite and government wanted them to do - spend and increase the GDP, generate jobs and make the brand-name owners rich.

    If most of the population does not do this my guess is the economy would wobble a bit more often - and possibly badly.

    The government gives incentives to save on various fronts - be it super, negative geared houses, etc. Anyone who leverages these opportunities gets the tax breaks along the way and the accumulated assets that the profligate consumers miss out on.

    Some of us end up NEVER getting any pension payments - BUT - we as I said - those people then get the tax breaks along the way and accumulate assets that the spenders didn't.

    This is of course what gets the masses angry about the so called rich - but tough - you can't consume your cake and also get to keep it.

    So I look at it this way - the majority or the population who blow their money along the way get the pension as a reward. This is a reward that I am happy to NEVER get if I can manage my money well over the years. If my world goes to hell - well the pension is there for me to fall back on if needed - which is what it is designed to do.
    ex PS
    25th Aug 2016
    5:55pm
    The welfare myth is being pushed by the government because they know that they can push "welfare recipients around "with out them getting any sympathy from the voters.
    They are using the same strategy as putting illegal in front of the activities of asylum seekers. If they and their stooges repeat it long enough it becomes true.
    Anonymous
    25th Aug 2016
    7:24pm
    ex PS - when did welfare recipients cease to be voters?

    Welfare = 'statutory procedure or social effort designed to promote the basic physical and material well-being of people in need.'

    Put another way - access to the age pension is legislated to be made available to Australians to ensure they do not live in poverty and their financial welfare is being addressed.

    If Australian couples have less than a certain amount ($820K) they can be provided with money through Centrelink.

    Using the simple globally accepted definition of welfare above (not the governments), pension money is ensuring those Australians financial WELFARE is being met.
    Baby Huey
    24th Aug 2016
    8:58am
    The superannuation system like the taxation system in broken with gutless incompetent politicians on both sides incapable and unwilling to properly "reform" and "overhaul" the systems. The politicians have constantly lied by promising no changes will be made to super and doing just the opposite. They then act and talk like Humpty Dumpty in Alice's Through the Looking Glass to try to explain themselves.
    Governments will continue fiddle with and make the super system more complicated and onerous to point the average superannuant will need a PhD to work out how they will get access to their own super savings.
    It is interesting to note that Whitlam in the 70's suggested a social security system similar to other countries separate to the welfare system that would have ensured a pension for all who paid in for a specified period. It is too bad this idea was not taken up as the screwed up superannuation system we have today would not exist and most of today's retirees would had over 40 years to save for their retirement.

    24th Aug 2016
    5:44pm
    The system is too complicated and far too obscenely generous to the wealthy, at the expense of the nation - and more so at the expense of the most needy. It needs a total overhaul, but the overhaul MUST include a more logical and practical approach to the pension system, recognizing that most of today's retirees had little or no superannuation and that the pension system should not be designed to discourage saving and punish folk for striving to self-fund retirement if they are not able to achieve their goal.

    It seems to me that the simpletons in Parliament just aren't capable of understanding the real world, much less acting in the nation's interests. Their focus is over-indulging the wealthy, and the honest, hard-working battlers are an easy target for fools who can't think past the simplistic nonsense of ''just reverse a change that shouldn't have been made in the Howard era.'' Of course it shouldn't have been made back then. But it SHOULD HAVE BEEN MADE and it should NOT be undone, because anyone with a brain understands that an assets test can't be reasonable if it doesn't factor in current return rates. Only a dimwitted idiot would suggest taking 7.8%+, indexed to inflation, off someone who can only earn 5% or less! What a preposterously STUPID idea!

    Clearly, the assets test MUST be designed to align with return rates, so that there is no reward for REDUCING savings or plunging more dollars into an unnecessarily expensive family home. That's just plain common sense. How sad that common sense is so very uncommon!
    Anonymous
    24th Aug 2016
    8:26pm
    Rainey - here is one government site that shows the historical events of pensions and super in Australia...

    http://www.aph.gov.au/binaries/library/pubs/bn/eco/chron_superannuation.pdf

    Taken from this above link - this probably is the basis for urban legends where I think you and others are getting very confused about there once being a pot of money dedicated to pensions - but there never was...

    1923 Bruce Government established a Royal Commission to examine the possibility of having a comprehensive national insurance scheme for retirement, sickness or disability.
    Royal Commission on National Insurance (7 Sept 1923-5 Oct 1927).

    1928 National Insurance Bill introduced. It lapsed in 1929 when the Government was defeated.

    1938 National Health and Pensions Bill passed, but its introduction was delayed, then abandoned because of World War 2.

    1945 Chifley Government introduced an additional levy on personal income tax which, along with a payroll tax from employers, was credited to the National Welfare Fund. There was, however, no direct link between contributions and benefits and the pension. The National Welfare Fund, whilst set up as a means of establishing a base from which a national superannuation fund could be operated, was in practice merely an accounting device until its abolition in 1985.
    Old Geezer
    24th Aug 2016
    8:36pm
    They took 7.8% off people simply because people do not need it.
    Circum
    24th Aug 2016
    8:54pm
    LOL OG
    adbob
    24th Aug 2016
    9:23pm
    Reasons' history stops at a convenient time.

    Menzies: “The stigma of charity should be removed from the Age Pension.” “It should be an entitlement earned by the person’s personal contribution to the fund.”

    A few years later he rolled the Welfare Fund into general revenue and spent it.
    Anonymous
    24th Aug 2016
    10:46pm
    adbob - I don't think you read it well - it quite clearly states there NEVER EVER was a direct link to pension payments.

    It was merely an accounting device. You can talk yourself blue in the face and wring your hands about it forever - but it was NEVER going to be a happening thing for funding pensions.

    If you are short now because you were counting on something that happened in 1945 - and believed quotes from Menzies - you should have been paying close attention to the Fund's abolition in 1985 - panicked because you know what governments do - and started planning for your own future immediately.
    Anonymous
    25th Aug 2016
    8:54am
    OG, how the hell would you know what other people need? What a disgustingly arrogant self-serving claim. It really brands you as an obnoxious and very selfish person.
    Anonymous
    25th Aug 2016
    8:56am
    And by the way, OG, need has NOTHING TO DO WITH THE ARGUMENT. It's about economic wisdom and the future of the economy. But it's clear you are too dense to comprehend.
    Old Geezer
    25th Aug 2016
    5:30pm
    I do understand though. We are now a nation that is too welfare dependent for the economy to prosper. People need to do it harder so that they will help themselves not rely on welfare handouts.

    I have no idea what other people need but obviously if they are not spending their retirement money then their needs are being more than met.

    They took 7.8% off people because people were not spending down their capital. This indicated that people were getting too much welfare so it needed to be rectified so that people were forced to spend their capital. That was the economic wisdom behind this and the future of the economy. That welfare money could simply be better spent elsewhere.

    So people effected by this change need to realise that they had it too good for too long and now will have rearrabge their affairs or wait util they spend down their capital enough to get the pension back. There is nothing disgusting or abnoxiuos about that at all.
    Anonymous
    25th Aug 2016
    6:51pm
    I agree OG - people confuse welfare as entitlements.

    This is not surprising considering the antics of our political class.

    Howard indexing the age pension access threshold did not assist this whatsoever as it shot up over $1.1m (insane). Middle class welfare across the Howard years also did not help if you expected it to last - but by the gods I leveraged this to the nth degree while it was available.

    People got a sense they could be wealthy welfare recipients through their working lives and their old age.

    And you are right - the government does NOT owe anyone a living - but as a compassionate society we believe that no-one should live in poverty should their assets be insufficient.

    I can't see the $820K threshold remaining that high - and people's exempt homes will continually be looked at as budgets get tighter.
    Circum
    24th Aug 2016
    8:50pm
    Reasons.You obviously have fixed views and assumptions about what others think .The pension is welfare in your mind and the average person should spend their own money before getting a full or part pension is what I think you are saying.You dispute and do not seem to understand the concept of one generation being supportive of another generation as an ongoing system.I am sure I cannot convince you to overcome your biases.

    I agree with you that ones assets should be taken into account in determining pension entitlement and I do believe most people understand that.

    Your example that a couple with $820000 can live on $70000 a year on 3% interest until 87 may be correct.After a few wines I will give you the benefit of the doubt.What you are really saying is that the first few years of retirement should be cool.After a few years that $70000 will buy you less and less even when the pension kicks in to assist.By 87 your $820000 is gone..Kaput.

    Given the tone of Reasons comments such as play the rules to your own benefit,I would be interested to hearing your views on my suggestion that a persons superannuation balance should not exceed $820000 or thereabouts as this is the figure the government has placed on its assets test pension entitlement.
    Or is this also a case of not going to happen as it rewards the well of at the expense of the not so well of .
    Anonymous
    24th Aug 2016
    10:29pm
    Circum - in 1908 the government legislated the age pension into being and it was to enacted to ensure no Australian would live in poverty - and access to it was means tested - just like it is now.

    Nope - that $70K calculation is adjusted 2.5% for inflation - the $70K goes up by 2.5% per annum. But sure - there is no money left at 87 - which is what happens. If you want to have money left - you just reduce your pension down from $70K and live more frugally - simple as that.

    I don't agree that there should be a $820K limit - it is too low. The new $1.6m limit is probably fair as it balances the ability to generate a reasonable pension without being excessive. It will seem a lot of money to many - but life is like that - some will be able to accumulate that much - others will not even get close. The reasons will vary from bad luck to consumer profligacy - and everything in between.

    OK - to someone who can't accumulate that much over time it seems excessive - but that's life - and we all just have to get over it. Someone who has $1.6m will be outgunned by another person with $100m or $1b or $50b. The same happens to those who are less well off - someone will have $10K another $100K or $500K or $1m, etc.

    I know I will always have far less money than others do and more than some others - that's just life - I got over that a long time ago and do what I can to manage my assets and income within the parameters I control.

    I think others on this site would be less frustrated if they also learnt the rules and controlled what they can to effect the best outcome for themselves with the resources they have.

    You can waste a lot of time on envy - and it gets you absolutely nowhere - hard work over time always gets you much further.
    Circum
    25th Aug 2016
    12:26am
    Thank you for answering my question and I appreciate your honesty reason.We seem to agree that the asset limit is too low at$820K and that $1.6 mill is fairer.No argument about that.Also agree with your cryptic definition of rich.ie a person who has more money than you .

    Yes envy is a human weakness but envy is too often used as an excuse to dismiss a bad situation.Sometimes things are right or wrong.Either way the asset limit for pension eligibility and super contributions limits should be the same .To have a different formula to allow people to put more into super than they reasonably need for a comfortable retirement,is an unjust burden on the population and an abuse of fairness and the taxation system.

    I have little faith that the powers that be care much for what we think.And that's sad
    Anonymous
    25th Aug 2016
    9:54am
    So an $820K limit is too low for superannuation purposes, but not too low for those who never had the benefit of super? What hypocrisy! Look after the privileged and stuff the battlers, eh?
    Anonymous
    25th Aug 2016
    9:54am
    So an $820K limit is too low for superannuation purposes, but not too low for those who never had the benefit of super? What hypocrisy! Look after the privileged and stuff the battlers, eh?
    Rodent
    25th Aug 2016
    10:19am
    Circum, Reasons, and Rainey

    Circum/Reasons -I am becoming confused by your postings. One minute you are writing about Super etc , the next minute you are talking about Pensions

    Rainey has posted a comment that is asking a Question that seems to say are you saying that the $820k limit figure you mention is two LOW? and it some how should be reflective if the Super $1.6Mil Figure.

    Am I the only one confused here?

    Given the "noise" now coming from Morrisson, today and next week I tend to think we may have to wait to see how this plays out. Clearly there are big changes that will have to happen in the near future, mostly re Super and Some further aspects of Pensions. I wrote about one of these earlier in this Post.
    Anonymous
    25th Aug 2016
    6:11pm
    OK Rodent - I will separate the two out.

    The Pension...
    The government has set a very generous level of $820K of assets outside the family home that you can have and still get the health care card and maybe $1.00 of pension.

    The age pension is designed with one purpose in mind - to ensure no Australian lives their old age in poverty.

    As I demonstrated above somewhere, this $820K means you could pay yourself about $70K per annum until you are 87 years old if you invested it at 3% - and that $70K is indexed at 2.5% per annum. It means you have no money left at 87 and that $70K is being supplemented by the age pension as you draw down on your original $820K. If you want to leave money to your kids, either get a higher return than 3% or draw less than $70K per year.

    NOTE - you get paid an increasingly larger government pension over the years.

    Super...
    For those who NEVER want to get paid a government pension and be totally self-funded, $1.6m is a probably a reasonable base level for the government to allow people to accumulate in assets. It means a couple with $3.2m investing at the same 3% rate would generate $96K. However. This $96K is not indexed and the capital will be eroded over time and would need to be addressed by higher rates of return than 3% or lower annual draw downs if you wanted to retain the capital value over time.

    Sure - these people with higher super amounts get a higher standard of living - and possibly get to leave it to their kids - but that is life - they saved it and are not asking for - or expecting ANY government pension money.

    And some pretty ordinary people are included in this category - $1.6m is far from the wealth of the real super rich. You will find that quite a number of people in this ~$1.6m category are purely there because they have chosen to ignore the consumerism that most people are sucked in by during their working lives.

    I hope that makes it clearer.

    25th Aug 2016
    10:23am
    As stated above :

    The objective of superannuation is:

    ‘to provide an income to substitute or supplement the Age Pension’

    It was not set up to be a saving account so that the wealthy can leave behind a large inheritance.

    It is time that measures are put in place to make sure it is used for the purpose it was intended.
    Adrianus
    25th Aug 2016
    10:36am
    Agree 100%. However, ever since RBLs were abolished we cannot seem to agree on the profile of the wealthy.
    Anonymous
    25th Aug 2016
    11:43am
    Frank this is from the Australian Financial Review in May this year.

    "Two thousand wealthy Australians have at least $20 billion stashed in their superannuation accounts, increasing pressure on the Turnbull government to stop the super system being used for unchecked wealth creation.

    Australian Tax Office figures show there are 990 people with self-managed super funds worth $10 million or more and 944 accounts in large pooled funds with $10 million plus.

    Six accounts have balances of more than $100 million each.

    While limits have made it impossible to now reach such high balances, under current settings it is still possible to tip $6 million into super over 30 years, experts say.

    Self-managed super fund balances.
    Self-managed super fund balances.
    The government has opened a debate about what the purpose of Australia's $2.3 trillion super system should be, and signalled it will make clear that wealth creation and estate planning are not part of that objective.

    Super's potency in generating wealth is that tax is minimised. Earnings on investments in super are taxed at only 15 per cent and capital gains at 10 per cent.

    What's more, once a person enters retirement the money is tax-free. Assistant Treasurer Kelly O'Dwyer's reference last week to super tax concessions as a "gift" from government was welcomed by those who argue the system disproportionately benefits the rich.

    But it alarmed the super industry, which is on track to have $40 trillion in assets under management by 2040.

    Australian Council of Social Service chief executive Cassandra Goldie told AFR Weekend tighter limits on contributions to the tax-advantaged super environment were needed to curb the "worst excesses" of the system.



    Read more: http://www.afr.com/news/policy/tax/nearly-2000-people-have-10m-or-more-in-their-super-20160311-gngl7n#ixzz4IIv7wz4t
    Follow us: @FinancialReview on Twitter | financialreview on Facebook.
    Anonymous
    25th Aug 2016
    11:44am
    I am staggered at the billion dollar amounts!
    Adrianus
    25th Aug 2016
    2:06pm
    That's obscene!!
    Those High Balance Accounts must be very old. I'm thinking pre SGC beginnings? Although it may have been possible to top up with a few $m during the last decade, with no cap on non-concessional contributions, but nothing in the order of $100m?? Many years ago I was a member of a SMSF with a handful of members. As part of a salary pkg I had employer concessional contributions going in at a very large (20%) amount. However vesting started at 5 years and scaled out over 25 years. I had to stay with the company for 25 years to get full vesting. Nobody stayed for more than a few years. Consequently I received 0 when I resigned after 3.5 years.
    Next time I signed off on an employment contract the vesting period was over 10 years and I received the total balance although I had to wait 4 years after leaving to get it.
    My point is that while the intended purpose of the vesting period was to handcuff the employee, it did not do that. Instead it made the trustee/members of the fund richer because all forgone benefits vested in the remaining members when the fund was wound up.
    Therefor a relatively small business with say 30 employees could have created those $m's? When one considers that say 10% of wages was contributed over many years? Either way, for a single member account to have more than $10m is obscene.
    I'm not sure how changes to existing super legislation can alter its use for wealth creation and estate planning? There may be features of estate planning they can change?
    Rodent
    25th Aug 2016
    5:31pm
    Hi Pepe La Pew

    You said - I am staggered at the billion dollar amounts!

    Unless I am reading this wrongly NO one person has Billions, the $20 Bill is over 2000 Individuals with balances in Millions- but that's still a heel of a lot of Money!!!

    Australian Tax Office figures show there are 990 people with self-managed super funds worth $10 million or more and 944 accounts in large pooled funds with $10 million plus.

    Six accounts have balances of more than $100 million each
    Old Geezer
    25th Aug 2016
    5:38pm
    To me it hardly worth worrying about with only 990 people with super balances more than $10 million in SMSFs etc. The tax lost here is a drop in the ocean.

    The problem as I see it going forward is the number of people in the future that could accumulate large balances.

    There should be an upper limit to how much you can put into super and once you have reached that limit then you can't put any more in.
    Rodent
    25th Aug 2016
    5:49pm
    OG

    For once I don't really disagree, but I seem to remember from one of your earlier posts that you might consider the amount to be about $3.2 Mil, am I correct?
    If no, then what do you consider to be both fair and reasonable that a person should be able to contribute to super going forward? (assume no changes to current rules)
    Current data might suggest its will work out to be lot less that $3.2Mil, and of course there are the Male/Female differences to consider
    JFYI I am past the age of any contribution, even new Govt changes, if they get through.
    Anonymous
    25th Aug 2016
    6:13pm
    ''It was not set up to be a saving account so that the wealthy can leave behind a large inheritance.''

    I agree, Pepe la Pew, but it should be remembered that most of the currently retired generation never HAD super until late in their working lives, at which point many were encouraged to TRANSFER savings into super. Now, these were PERSONAL SAVINGS - not necessarily intended to fund retirement. They were achieved by lifestyle sacrifice.

    I don't think we should be indulging the wealthy, but the current retirement funding system is hurting people who are NOT wealthy, never had super (or transferred personal savings into super late in life) and it seems there is no consideration for the difference in their circumstances to the circumstances of younger Australians now using super as a retirement saving vehicle.

    I think we need to step back, stop making assumptions about other people's circumstances, and recognize that incentives and rewards MUST be maintained and fairness must be a consideration in all reforms. We SHOULD reform. That's a given. But to take 25 - 30% or more from a small portion of the retired population who are NOT ''wealthy'' - but are really just ''comfortable'' - via a policy that actively discourages saving and responsible planning - is not sound policy reform and won't do the nation any good. We should be viewing BOTH super and pensions very differently - recognizing the realities of a challenging economic environment we live in and the very different circumstances of older Australians who have not enjoyed the benefits now available to employees.

    The retirement system is a mess. It can cost up to $11000 a year to own a home in retirement. Having $800,000 in savings, in some circumstances, yields no greater benefit than having $400,000.

    The problem is that we are NOT focusing on the wealthy. Middle-income battlers are being crucified while the rich party and the poor get poorer. The system is broken, and it needs far more than carelessly applied ''bandaids'', but it seems to me that the current crew of politicians is totally inept and brainless - like many here who keep making dumb comments based on assumptions, greed and envy, instead of looking at the relevant question of how the natural response of affected people will impact on the economy. It's not about who can afford what or what standard of living some theorist considers adequate. It's about the message reforms send to people and how they respond. We need policy that will drive the kind of behaviour that is needed for economic recovery - and right now what we are seeing is the EXACT OPPOSITE. STUPID short-sighted policies from idiots who can't see past their noses and can't think beyond ''take money from battlers who saved a bit''.
    Anonymous
    25th Aug 2016
    6:39pm
    Rainey - I hear this 'we never had super' crap all too often. If your young self had thought about how your old self was going to survive in old age, you could have done something about it outside of super.

    It's just an excuse people use for poor planning.

    You REALLY need to get over the fact that you must use your own money in your retirement before you get the penion - that is what it is for - and no-one is really going to feel any empathy otherwise.

    Wait 'til they force the family home into the asset equation - you are going to have an apoplexy.
    Old Geezer
    25th Aug 2016
    7:51pm
    Reasons I agree with you. People have to realise that the money they saved for retirement needs to actually spent in retirement. What are they saving it for otherwise? Hey let's face it they are not going to be around to see the delight on their heirs faces when they tally up the assets. So no benefit is not spending it.

    Yes it is just poor planning not just an excuse to say "we never had super". I started out just saving for a rainy day and grew my rainey day investment pool into enough to fund my retirement. I actually retired some 25 years ago and I'm better off financially today than the day I retired. I don't have a big percentage of my wealth in super as I use other ways of tax effective investing as well.

    I've been talking to some financial advisors lately and the word on the street is that the home is being considered as part of the assets. One scenario is a figure of $2 million is being used as a starting point with anything over that being added to the assets test.
    Adrianus
    25th Aug 2016
    8:25pm
    Pepe, my comment...."Agree 100%. However, ever since RBLs were abolished we cannot seem to agree on the profile of the wealthy."
    If we regard the wealthy as having a High Super account balance, and if that is the only criteria then isn't this a backtrack to the days of RBLs? I recall an RBL at "5 x FAS" then "7 x FAS." I like the idea of 11 x the average annual wage, whatever that is each year. I don't know where I got that idea? Think I thought of it myself. Trouble is the introduction of those limits would be difficult to impose on members who have planned under different rules.


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