# Superannuation pain must extend to politicians



## bigdog (8 April 2015)

http://www.heraldsun.com.au/news/op...ry-fni0ffsx-1227290589503?from=herald+sun_rss

*Superannuation pain must extend to politicians*
TOM ELLIOTT
Herald Sun
April 04, 2015 

TO turn a biblical principle on its head, politicians need to do unto themselves as they do unto others.

Despite repeated promises not to fiddle with superannuation, our retirement savings aren’t safe from the Federal Government. Treasurer Joe Hockey has a budgetary black hole inherited from the Rudd-Gillard Labor governments. Quite rightly he wants to fix the fiscal mess. Unfortunately, he won’t be able to resist extracting more tax from super. We should only cop that if and when retired parliamentarians give back some of the largesse we bestow upon them.

Until 2004, Australian politicians enjoyed one of the best pension schemes going around. If they served at least nine years in Parliament, they could retire at any age and receive until death 75 per cent of their final salary ”” with that amount increasing over time in lock-step with future MP pay rises.

Our federal representatives often argue they’re underpaid for the difficult job they perform. But they conveniently forget to mention the huge cost to the taxpayer of funding their privileged retirements.

Thanks to former Labor leader Mark Latham, that overly generous scheme was terminated 11 years ago. As a result, MPs elected since then receive a more conventional (albeit still generous) superannuation allowance similar to that earned by the rest of us.

Yet MPs elected before 2004, such as Tony Abbott, Joe Hockey, Tanya Plibersek and Christine Milne, will prosper lavishly under the old scheme when they retire.

Mr Abbott, once he becomes a former prime minister, won’t just enjoy an indexed pension of about $200,000 per annum. He’ll also receive an office, federally funded staff members and free air travel for the rest of his days. In total, retired PMs each cost taxpayers about $500,000 a year.

Nothing in these political perks is new, of course.

And as the political “Class of pre-2004” shuffles off, over time the overall cost to taxpayers for politicians’ pensions will decline.

Unfortunately for us, what is changing is Canberra’s urgent need for fresh sources of funding. Just about every economic analysis doing the rounds in Treasury shows that thanks to our ageing population, increasing healthcare costs and unsustainable growth in welfare, the federal Budget may never again experience a surplus.

So the choices for Mr Hockey are simple to understand yet politically difficult to enact: collectively we must either cut spending (never popular around election time), increase taxes (ditto) or undertake a combination of the two. For two main reasons, superannuation is a prime target for higher taxation.

First, compared with other forms of income, super is relatively lightly taxed. If you earn less than $300,000 per annum, your super fund only makes contributions to Canberra at the rate of 15 per cent. That compares favourably with both company tax (30 per cent) and the top rate of personal income tax (a whopping 49 per cent).

Second, taxing super doesn’t hit voters in the hip pocket now. Rather we only notice its impact years down the track at retirement. And how many people check the balance of their super fund on a regular basis, let alone worry about whether it’s sufficient for their golden years? Answer: not many.

So if extra revenue is required at a time when votes are precious to an unpopular government, it’s odds-on Mr Hockey will soon unveil a superannuation surcharge for either high-income earners or people with big retirement fund balances ”” say, those with more than $3m.

Like anyone who’s been forced to live within their means, I wish our federal politicians would pay more attention to cutting spending rather than increasing revenue. Thanks, however, to the obstructive Senate, new taxes are the order of the day.

Wealthy retirees should accept the upcoming superannuation haircut if, and only if, politicians such as Tony Abbott agree to sacrifice some of their generous retirement benefits. Those of us who live in the real world are far more likely to agree with fiscal pain if those imposing it feel the same hurt.

Tony Abbott’s annual payment of $500,000 post-retirement would require a superannuation balance of about $10m to finance. That already makes the PM one of wealthiest retirees-to-be in the country.

And unlike the rest of us whose super fluctuates with the fortunes of the market, Mr Abbott’s pension is guaranteed forever by us taxpayers.

When super funds with more than $3m are slugged for a bit extra, their owners should ask both the Treasrer and PM: “How much are you contributing?”


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## sptrawler (8 April 2015)

Great to see people are commenting on the pollies perks.


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## finnsk (8 April 2015)

sptrawler said:


> Great to see people are commenting on the pollies perks.



Totally agree


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## bigdog (10 April 2015)

*excerpt from original posting*

"Wealthy retirees should accept the upcoming superannuation haircut if, and only if, politicians such as Tony Abbott agree to sacrifice some of their generous retirement benefits. Those of us who live in the real world are far more likely to agree with fiscal pain if those imposing it feel the same hurt.

Tony Abbott’s annual payment of $500,000 post-retirement would require a superannuation balance of about $10m to finance. That already makes the PM one of wealthiest retirees-to-be in the country.

And unlike the rest of us whose super fluctuates with the fortunes of the market, Mr Abbott’s pension is guaranteed forever by us taxpayers.

When super funds with more than $3m are slugged for a bit extra, their owners should ask both the Treasurer and PM: “How much are you contributing?”


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## sptrawler (10 April 2015)

bigdog said:


> *excerpt from original posting*
> 
> "Wealthy retirees should accept the upcoming superannuation haircut if, and only if, politicians such as Tony Abbott agree to sacrifice some of their generous retirement benefits. Those of us who live in the real world are far more likely to agree with fiscal pain if those imposing it feel the same hurt.
> 
> ...




By the lack of interest in the post, it would indicate, most people don't care what hypocrisy, the politicians spew forward.
Or they are worried, that 'big brother is watching' and anything they say, will come back to bite them.


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## Mrmagoo (12 April 2015)

It should not apply to politicians. Politicians need to be financially set up after office so that people from all walks of life are able to get into politics.

Rich boomers have had it too easy and too good for far too long. They have normalised this culture of ridiculous benefits for them and only them.


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## sptrawler (12 April 2015)

Mrmagoo said:


> It should not apply to politicians. Politicians need to be financially set up after office so that people from all walks of life are able to get into politics.




That's the funniest thing I've heard for a while.
People from all walks of life generally can't get pre selection.
But I'm sure Clive Palmer, Malcolm Turnbull etc will need your special financial help. 
While you struggle away trying to catch up, with the unfair housing sector, that you're so upset about.


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## Smurf1976 (12 April 2015)

sptrawler said:


> People from all walks of life generally can't get pre selection.




If you want to enter politics with Liberal or Labor then the best advice is either become a lawyer or work for a union.

The Greens candidates do tend have a more diverse background which includes, believe it or not, those who have worked in the timber industry.

Failing that, the only option is to be one of the rare independents who actually gets elected and does something significant.

Back to superannuation, that they keep changing aspects of it is what scares many people (myself included) from contributing to it beyond compulsory employer contributions. There's no point having enough money to retire at 55 then finding out the government has locked it up for you until you're 70.


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## sptrawler (12 April 2015)

Smurf1976 said:


> Back to superannuation, that they keep changing aspects of it is what scares many people (myself included) from contributing to it beyond compulsory employer contributions. There's no point having enough money to retire at 55 then finding out the government has locked it up for you until you're 70.




Then when you turn 70 they say "we will take that, and give you $x/ week for the rest of your life, on top of a Government pension".


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## nulla nulla (13 April 2015)

sptrawler said:


> Then when you turn 70 they say "we will take that, and give you $x/ week for the rest of your life, on top of a Government pension".




Assuming that $x weekly x 52 represents the minimum of 5% of your superfund balance at 70, and you pass at 75 having drawn down 25% of the fund value when you were 70. 

What happens to the remaining 75% of the original fund value (plus earnings over the last 5 years) when you pass?

Does it disappear into the Government coffers or do your kids inherit it?


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## prawn_86 (13 April 2015)

Smurf1976 said:


> Back to superannuation, that they keep changing aspects of it is what scares many people (myself included) from contributing to it beyond compulsory employer contributions. There's no point having enough money to retire at 55 then finding out the government has locked it up for you until you're 70.




As someone still in their 20's i completely agree. In fact, i am preparing for worst case scenario of continual fiscal mis-management and assuming i will not get any of the funds in my Super account, over the next 40 odd yrs i am sure they will find a way to tap into that pot of gold...


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## sptrawler (13 April 2015)

nulla nulla said:


> Assuming that $x weekly x 52 represents the minimum of 5% of your superfund balance at 70, and you pass at 75 having drawn down 25% of the fund value when you were 70.
> 
> What happens to the remaining 75% of the original fund value (plus earnings over the last 5 years) when you pass?
> 
> Does it disappear into the Government coffers or do your kids inherit it?




If that hypothetical system  did eventuate and history repeated, the remainder would go to the Government. 
It would obviously need to be enacted very slowly, in small steps, but the Governments work on extremely long time frames.

Initially the retirees who agreed to hand over their capital, would qualify for an age pension +annuity.
A percentage of the remainder,  at death, would be taken by the Government to cover administration.
Then when it was completely accepted and integrated, they fine tune i.e means test, inheritance tax.
Whalah, self funded age pension.

Anyway it is only what ifs and speculating, I love a conspiracy theory.


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## banco (13 April 2015)

Smurf1976 said:


> Back to superannuation, that they keep changing aspects of it is what scares many people (myself included) from contributing to it beyond compulsory employer contributions. There's no point having enough money to retire at 55 then finding out the government has locked it up for you until you're 70.




Well if the oldies and baby boomers weren't so good at using their political muscle in good times to extract costly promises from the Government we wouldn't have to keep on contemplating changes.


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## pixel (13 April 2015)

prawn_86 said:


> As someone still in their 20's i completely agree. In fact, i am preparing for worst case scenario of continual fiscal mis-management and assuming i will not get any of the funds in my Super account, over the next 40 odd yrs i am sure they will find a way to tap into that pot of gold...




I reckon your reasoning is spot on, and I regret every cent of my (substantial!) Salary Sacrifice made in the 1990's. I wish there had been Forums like ASF around, helping me become much sooner investment-savvy and self-reliant rather than listen to "Professionals" with primarily self-interest.


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## sptrawler (13 April 2015)

pixel said:


> I reckon your reasoning is spot on, and I regret every cent of my (substantial!) Salary Sacrifice made in the 1990's. I wish there had been Forums like ASF around, helping me become much sooner investment-savvy and self-reliant rather than listen to "Professionals" with primarily self-interest.




Ain't that the truth, well said pixel.


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