# Superannuation is a Dud for Young Australians



## Garpal Gumnut (31 March 2013)

As an older Australian, I believed the government, and saved and placed my money in Superannuation, over the past nearly thirty years.

In six short years I now face the threat of losing a large percentage of my savings in government tax.

This is to pay for failed schemes such as the Pink Batts fiasco, the rollout of computers to schools at exorbitant prices, inefficient infrastructure projects such as school buildings at 10 times the cost if done privately and the NBN which will shortly be scrapped at huge loss.

Take my advice and do not put any money in to Superannuation beyond that which is mandated by legislation.

If Government offer you incentives to increase your contributions, do not do so.

The present ALP Government, and future ALP Governments within your lifetime, will raid your Superannuation account to pay for hare brained schemes.

Pay off your mortgage, and save.

But avoid Superannuation.

It is a honeypot for inefficient governments.

gg


----------



## qldfrog (1 April 2013)

Garpal Gumnut said:


> As an older Australian, I believed the government, and saved and placed my money in Superannuation, over the past nearly thirty years.
> 
> In six short years I now face the threat of losing a large percentage of my savings in government tax.
> 
> ...



+1

GG,
as a migrant from socialist western europe, I had an early experience of the class war mentality and waste ways of government.
As a result, I have always refused to put a cent into super unless obliged to.
I can not tell you how often i have been ridiculed by this, relations, friends, financial advisor:
" you pay 50% tax, how can you loose if you are taxed at 15% only, etc..."
well the last few years were quite revealing...
, no one should put money in a system where you are not able to get it back when you want to.

I am also going to give you for free a few 10/20y forecasts for Australia based on the way this country is repeating  my home country mistakes in a painful to watch:

-more and more regulations for everything: you think it is bad now, wait for it: color of your roof, what you eat, buy and even worse what you are allowed to think: the lot
- serious crime due to unrestricted migration from incompatible culture (if I am more precise, I can probably already be sent to jail) and I mean serious as thousands of violent crimes, rapes, murders, no go areas  
- emergence of a ghetto culture which will NOT i repeat NOT be integrated at all like the previous southeuropean or asian waves
- an australia first movement will rise but be cut in the bud as it has in every european country when the balance of power moves away from the current mainstream culture 
- culture of entitlement and welfare, I have rights to - a tv, a car a house......
- Pension will be highers that wages (we deserve it we have worked all our live bla bla)
As a result of the above an ever dimishing productive class (both blue and white collar) taxed to death and fleeing the country or just giving up and sharing an ever diminishing cake.

- a collapse of education, of the level of politics (even Keating might be seen as far right  vs what the Liberals will become: they have to follow the Me Me vote or never be in power)

If only I could be wrong,  in the last twenty years in australia I have seen repeated every mistake made in my home country and with the same results....
I left Europe, where will my son go?
So definitively, no money in voluntary super and ideally investing O/S


----------



## medicowallet (1 April 2013)

My children have been advised to contribute the minimum.

imo they should consider with the current vote buying/pandering, borrowing/consumptive movement buying a property geared to the hilt and letting the government go backwards with negative gearing losses.

Because this stupidity is what Wayne Swan is all about.  What an absolute clown, worried only about the current term and not about the failure of millions of Australians wrt their funding requirements in 20 to 30 years time.

MW

(if they are worried, then some serious thought about increasing retirement age is an option too)


----------



## FlyingFox (1 April 2013)

Agree with GG. I don't put any more into super than is compulsory as I don't expect to see any or much of it in 35 years when I retire (I will move to a SMSF if/when I change jobs). 

I think the changes are being brought about due to un-sustainaility of voting buying measures by the various preceding governments, not just the current one. Also I don't think the gov will retrospectively tax you gg.



qldfrog said:


> .....
> I can not tell you how often i have been ridiculed by this, relations, friends, financial advisor:
> " you pay 50% tax, how can you loose if you are taxed at 15% only, etc..."
> well the last few years were quite revealing...
> , no one should put money in a system where you are not able to get it back when you want to.




I used to tell my dad to put some of his savings into super prior to retirement. He wouldn't have a bar of it and I am glad he was stubborn enough to refuse.



qldfrog said:


> - culture of entitlement and welfare, I have rights to - a tv, a car a house......




Already here.



qldfrog said:


> - Pension will be highers that wages (we deserve it we have worked all our live bla bla)




Don't think so. The pension is in real danger going the way of the dodo. Plus if migration is kept in check, its wages that will blow out as there will be fewer workers as a proportion of the general pop. 



qldfrog said:


> As a result of the above an ever dimishing productive class (both blue and white collar) taxed to death and fleeing the country or just giving up and sharing an ever diminishing cake.




True.....probably happen everywhere. 



qldfrog said:


> - a collapse of education, of the level of politics (even Keating might be seen as far right  vs what the Liberals will become: they have to follow the Me Me vote or never be in power)




Me Me politics has been around for a while now and it's not just labor doing it. Labor has made some monumentally bad executions of policies but at least some of them have been against the grain and unpopular e.g current debate on super. Now if they will only get rid of neg gearing and bring on a land tax before they get kicked out  

Collapse of education has to do as much with funding etc as culture. There are very few incentives for being highly educated..



medicowallet said:


> My children have been advised to contribute the minimum.
> 
> imo they should consider with the current vote buying/pandering, borrowing/consumptive movement buying a property geared to the hilt and letting the government go backwards with negative gearing losses.
> 
> ...




+1. He won't be around in 20 to 30 yrs. Having said that, the liberals will not be any different.....


----------



## drsmith (1 April 2013)

The retirement age for the age pension was recently increased. 

http://www.humanservices.gov.au/customer/enablers/centrelink/age-pension/eligibility-for-age-pension

The preservation age for super was increased in the 90's.

http://www.ato.gov.au/smsf/content.aspx?doc=/content/60489.htm&page=10&H10

With life expectancy increasing, this is where the government should be looking for long term sustainability. Even these types changes though reduce public confidence in the system.


----------



## chops_a_must (1 April 2013)

drsmith said:


> The retirement age for the age pension was recently increased.
> 
> http://www.humanservices.gov.au/customer/enablers/centrelink/age-pension/eligibility-for-age-pension
> 
> ...




Not really.

It just moves people onto disability pensions.


----------



## drsmith (1 April 2013)

chops_a_must said:


> Not really.
> 
> It just moves people onto disability pensions.



That's another issue that falls into a broader welfare context.


----------



## banco (1 April 2013)

Garpal Gumnut said:


> As an older Australian, I believed the government, and saved and placed my money in Superannuation, over the past nearly thirty years.
> 
> In six short years I now face the threat of losing a large percentage of my savings in government tax.
> 
> ...




The vast majority of it is pay for your fellow baby boomers twilight years or would you prefer the younger generations pay for that?


----------



## Smurf1976 (1 April 2013)

drsmith said:


> The preservation age for super was increased in the 90's.



And that is the single biggest issue that I see with it.

If I put heaps into Super and can afford to retire at 55 then that's exactly what I'll want to do. None of the government's business - it's my money after all.

I see Super as something that might be of some benefit to me when I'm 70 or older. It might pay the nursing home fees or something like that but it's not a likely means of funding anything of note before I'm too old to enjoy it.

I have the compulsory contributions going in only and prefer to keep the rest of my money well away from a government controlled scheme such as this one.

As to the broader issues with where Australia is headed etc, it's the curse of natural resource wealth which makes it possible. Without all those rocks in the ground, the only way to keep the people prosperous and happy (and the taxes flowing into government) is through education, productivity, innovation etc. But there's no need for any of that if you've got a fortune coming out of the ground - it's similar in most countries with large mineral resources of value in that it removes the need to work and be productive.

So mining is really a double edge sword. On one side it brings wealth. On the other side it does so relatively easily, thus allowing most of the population to become economically lazy. Hence we end up with an economy where basically nothing other than mining is competitive internationally - a massive risk if mineral prices drop. 2twocents


----------



## drsmith (1 April 2013)

Smurf1976 said:


> So mining is really a double edge sword. On one side it brings wealth. On the other side it does so relatively easily, thus allowing most of the population to become economically lazy. Hence we end up with an economy where basically nothing other than mining is competitive internationally - a massive risk if mineral prices drop. 2twocents



Economically lazy very much sums up the final years of the Howard Government and even more so, the Labor governments since.


----------



## FlyingFox (1 April 2013)

Smurf1976 said:


> If I put heaps into Super and can afford to retire at 55 then that's exactly what I'll want to do. None of the government's business - it's my money after all.




Except that taxpayers have subsidized part of it. Hence you can't have your cake and eat it too.



Smurf1976 said:


> As to the broader issues with where Australia is headed etc, it's the curse of natural resource wealth which makes it possible. Without all those rocks in the ground, the only way to keep the people prosperous and happy (and the taxes flowing into government) is through education, productivity, innovation etc. But there's no need for any of that if you've got a fortune coming out of the ground - it's similar in most countries with large mineral resources of value in that it removes the need to work and be productive.
> 
> So mining is really a double edge sword. On one side it brings wealth. On the other side it does so relatively easily, thus allowing most of the population to become economically lazy. Hence we end up with an economy where basically nothing other than mining is competitive internationally - a massive risk if mineral prices drop. 2twocents




+10. We probably had a bit of this prior t the mining boom and it got multiplied by the boom.


----------



## Julia (1 April 2013)

banco said:


> The vast majority of it is pay for your fellow baby boomers twilight years or would you prefer the younger generations pay for that?



Perhaps not 'the vast majority' but certainly some.  Ideally, the Super scheme - when in operation long enough and at a sufficient level - should provide a retirement living for most people, unless governments start helping themselves to it.

There will always be inequity in the way some people are funded by others and I don't think any of us resent paying for those who are genuinely disadvantaged.  That's quite different, however, from continually being sucked dry by those with an entitlement mentality.

A small example of this today:  I wanted to give my dog a drink from a beachside tap but it was taken up with a hose going into a caravan parked a few metres away.  Apparently the caravan owner was using some sort of in-caravan washing machine.  There are several council run caravan parks, funded by ratepayers, running at a considerable loss because of the supa dupa facilities offered at low cost, eg overnight under $20 with all power and water, plus laundry, shower, toilet facilities thrown in.
Yet this woman was too mean to even pay that when she figured she could get it for free.

So, banco, whilst your point is well made, maybe consider that some of us just get pretty sick of propping up the freeloaders all the time.


----------



## McLovin (1 April 2013)

FlyingFox said:


> Except that taxpayers have subsidized part of it. Hence you can't have your cake and eat it too.




Not only that, but once someone is in pension phase, it's not like they stop using government resources, healthcare being the biggest one. If someone wants to dole out the "it's my money, I saved it, the government has no right to it" then they shouldn't expect taxpayers to pick up the tab for them.


----------



## Pager (1 April 2013)

Those with decent balances with there super when they retire will be very much easy pickings for governments in the future IMO, most people don’t contribute to there super and there is no way most if not all of them will be self funded if just relying on the employer compulsory contribution at the current rate.

Future governments will use this and twist and turn things to make the masses who are not able to fund any kind of retirement without government help to see those who have and built good nest eggs as being justifiably forced to pay more taxes even if prior governments promised this would never happen, ODDS ON, IT WILL.


----------



## FlyingFox (1 April 2013)

McLovin said:


> Not only that, but once someone is in pension phase, it's not like they stop using government resources, healthcare being the biggest one. If someone wants to dole out the "it's my money, I saved it, the government has no right to it" then they shouldn't expect taxpayers to pick up the tab for them.




It would not be so bad if it was just medical bills etc. As I understand it, with current super rules your are entitled to do what you want "with your money" once you retire. Within a few "weak" limits you can blow all your money in a year or two of retirement and go onto the pension.

Edit: An example http://www.superguide.com.au/access...repay-debts-with-super-then-claim-age-pension


----------



## qldfrog (1 April 2013)

drsmith said:


> Economically lazy very much sums up the final years of the Howard Government and even more so, the Labor governments since.




I have to agree, the last few years of Howard were appalling...but compared to nowadays....


----------



## Smurf1976 (1 April 2013)

Julia said:


> A small example of this today:  I wanted to give my dog a drink from a beachside tap but it was taken up with a hose going into a caravan parked a few metres away.  Apparently the caravan owner was using some sort of in-caravan washing machine.  There are several council run caravan parks, funded by ratepayers, running at a considerable loss because of the supa dupa facilities offered at low cost, eg overnight under $20 with all power and water, plus laundry, shower, toilet facilities thrown in.
> Yet this woman was too mean to even pay that when she figured she could get it for free.



There's a picnic ground beside the river and between two power stations. It's all pretty much straight beside the road in the middle of nowhere and tourists often stop for a break, use the toilets, take photos of the penstocks (pipes) coming down the hill and so on. 

Given that the location is literally right next to two power stations there is, as you would reasonably expect, electricity available to anyone who wants it. And yes it's free. Most do nothing more than run an extension lead into a caravan to use the microwave or boil the kettle etc. Likewise those who decide that it's a good spot to iron their clothes dry whatever - no hassles there. 

Let's just say that someone (general public) had to be asked to cease doing their welding in the picnic ground. Apart from wondering just how much of the (free) electricity they intended using, there's that little point about safety when you've got people wandering around and someone doing their welding in a picnic ground beside the road.....


----------



## sptrawler (1 April 2013)

The real dud is the politicians pensions, enough said.


----------



## maffu (5 April 2013)

Garpal Gumnut said:


> As an older Australian, I believed the government, and saved and placed my money in Superannuation, over the past nearly thirty years.
> 
> In six short years I now face the threat of losing a large percentage of my savings in government tax.
> 
> ...





I don't understand this argument at all. Think of it from an opportunity cost perspective.

You could have not put extra money into your super, and invested it outside of super in your own name, and you would have paid the full marginal tax rate on the investment income, and ended up way behind where you are now as you would have been paying 45c+ instead of the 15% you have paid.

Sure you will now be paying 15% tax on super earnings over 100,000 but that is still much better than the alternative of having that income in your own name and paying the full marginal tax rate.

Some people have over $100,000,000 in their SMSF and might be earning $5-10million a year in investment returns and paying 15% tax on that income and they are complaining that it might be increased! If that cash was in their own name they would be paying 45c to the dollar.


----------



## stewiejp (5 April 2013)

Great topic, and the reason I don't contribute to Super - in my short 23 years of working full time, the "goal posts" have been moved more times than I can count, and bearing in mind I could be working another 40 years I'm sure they will be moved again!

_Some people have over $100,000,000 in their SMSF and might be earning $5-10million a year in investment returns and paying 15% tax on that income and they are complaining that it might be increased! If that cash was in their own name they would be paying 45c to the dollar. _

Not necessarily - if they are putting the money (for example) into the stock market, the capital gains won't be taxed at all until the shares are sold, and during those years that untaxed return could be re invested at more profit. If they are paying 45% tax, the dividend will already be most likely taxed at 30% - therefore 15% more tax paid - though I do realise the benefit of franking credits. 
Somehow I doubt someone with 100 million stashed away for retirement will struggle in retirement, regardless of how much tax they are paying.


----------



## sptrawler (5 April 2013)

stewiejp said:


> Great topic, and the reason I don't contribute to Super - in my short 23 years of working full time, the "goal posts" have been moved more times than I can count, and bearing in mind I could be working another 40 years I'm sure they will be moved again!
> 
> _Some people have over $100,000,000 in their SMSF and might be earning $5-10million a year in investment returns and paying 15% tax on that income and they are complaining that it might be increased! If that cash was in their own name they would be paying 45c to the dollar. _
> 
> ...




Firstly how would someone get $100million in super, with the old RBL's and the new contribution caps?

Secondly why would you bother if you had that sort of money there are less transparent and onerous vehicles to park that sort of money.
I think your blowing wind up my ###, or your talking about someone with dementia, the other option they may have a financial planner.

Talking about financial planners, I love how Michael Pascoe thinks people with $2m in super are fat cats and should be hammered harder.
Why would I pick him as my financial planner? he's meant to make me money?
Doesn't he realise, 10 years ago I could buy a house in Perth for about $140k in a resonable suburb. 

Now it will cost $500k, applying the same logics $2m, in house terms is now worth about $600k.

Also not a good advert for the Eureka Report, investment paper, I think he writes for them.LOL

This is the whole problem no one takes into account inflation, 10 years ago $1m was a lot of money, today it's not someone would throw their job in for.

Anyway here's Pascoe's, IMO, silly blurb. 
http://www.smh.com.au/business/super-still-gold-for-the-fabulously-wealthy-20130405-2hb5q.html

This from someone who wants to protect your wealth for the next, 30,40 or 50 years.lol

He should probably get a job in the mines. 
If he thinks that someone who has sold assets to get $2m in super, makes them fabulously wealthy, what a dick.
Yep, I'd choose him as my financial planner, obviousl $2m is a bling amount to him.lol
My opinions only, but I think people don't think enough on inflation, the forward buying power of your money.


----------



## sptrawler (5 April 2013)

Sorry I was interupted,

To continue on, most financial planners say you require approx 60% of you final salary in retirement.

Well most fifo workers are on $160k apparently, well to get to get $96k pension(60%) at 5% is approx $2m.

So who is telling the porky's. LOL

It all appears to be 'rope a dope' to me.

Why the reporters aren't demanding the tax be 15% on pensions above $100k, just highlights their ignorance or lack of vision.


----------



## stewiejp (5 April 2013)

couldn't agree more, hence my reply - the 100 mil figures and tax rates were the previous poster's - I was just replying to them. Should have used the quote thingy.. sorry - late


----------



## Vixs (5 April 2013)

sptrawler said:


> Sorry I was interupted,
> 
> To continue on, most financial planners say you require approx 60% of you final salary in retirement.
> 
> ...




You can't take a rule of thumb and apply it to an exceptional circumstance. Most people don't have salaries or day rates inflated for inconvenience and danger pay.


----------



## Smurf1976 (5 April 2013)

maffu said:


> I don't understand this argument at all. Think of it from an opportunity cost perspective.



The argument is quite simply that I don't want government deciding when and under what circumstances I can withdraw *my* money.

If I have enough to retire at 55, 58, 60 or whatever then that's exactly what I'll do. Super doesn't allow this, therein lies the problem. I'm not seeking to end up with a huge balance remaining on the day I die.....


----------



## sptrawler (5 April 2013)

Smurf1976 said:


> The argument is quite simply that I don't want government deciding when and under what circumstances I can withdraw *my* money.
> 
> If I have enough to retire at 55, 58, 60 or whatever then that's exactly what I'll do. Super doesn't allow this, therein lies the problem. I'm not seeking to end up with a huge balance remaining on the day I die.....




Jeez smurph it must come with the territory, I have scrimped and saved all my working life to ensure I'm not beholden to anyone.
I was quite fortunate I did, because I've suffered from really bad arthritis requiring several joint replacements.
What I would say now is people should really think about tax effective investment outside of super.


----------

