Super

[Happy]

From ABC, January 5, 2007

GOVT TO PUSH SUPER OPTION TO YOUNG

The Federal Government is considering changes to superannuation to try to encourage young Australians to save more for their retirement.
The last Federal Budget included an overhaul of superannuation taxation which will come into effect this year.

The Assistant Treasurer, Peter Dutton, says the Government is consulting the superannuation industry about ways to target younger Australians.

"We need to be thinking about ways in which we can do that, how we can capture those people, particularly young people who might have capital gains out of property sales or share sales, or people who might be involved in the resource sector, who are earning bigger money than they'd ever imagined before," he said.

"They are the challenges and that's what we're thinking about at the moment."

Tax reform is badly needed, and as many said already, Government willingly or accidentally makes handouts population mentality.

Quite silly to start taxing people as soon as they nudge $7000 pa and then give them assistance in a form of different support payments up to close to $50,000 as in case of super co-contribution.

Why not start tax at $20,000 and let people run their own life?

As to super? Why entry tax at all? Wouldn’t it assist super to reach level of self-sufficiency better?

 

[Prospector]

Actually, why any tax at all on Super! Why do they tax super when the sole purpose is to ensure that people when reaching 'pensionable age' do not rely on the pension. You cant access it until you are 60, so what is their point?

 

[silence]

Yes, super shouldn't be taxed at all. In theory when it's spent GST is paid anyway.

 

[krisbarry]

Super rules need to change to allow extra contibutions to be used to purchase a house.

At this stage when people cash in their super at aged 60 ish, then they pay out the remainder of their home loan.

 

[clowboy]

Super rules need to change to allow extra contibutions to be used to purchase a house.

At this stage when people cash in their super at aged 60 ish, then they pay out the remainder of their home loan.

Who would that be? Not saying that there aren't some people in this situation, but I certainly dont know of anyone like this. Most people I know approaching super will be downsizing to add funds to their super as they have put everything into their house and nothing into their super.

 

[krisbarry]

It has been reported many times over in the media, and financial magazines over the past 5 years that many couples who still have outstanding mortgage payments at the age of retirement will clear the morgagte first using thier super funds. The scary fact is that this group of retirees is growing rapidly.

There was a scare campaign saying many retiress would get a rude shock when they retire, clear the morgagte and have to live off a combined pension and super fund.

The new super rules will change all this:

We will now see down-sizing of property and retirees dumping loads of money in super funds.

 

[Happy]

We will now see, ... , dumping loads of money in super funds.

Until 1 July 2007 we can dump $1,000,000 after 1 July 2007 around 100k a year

 

[hilly1981]

You will be able to make $150,000 undeducted contributions per year (indexed at $5000.00 per year), and $50,000 deducted contributions (taxed at 15%) per year (also indexed at $5000 per year).

 

[ctp6360]

I actually DID put $1,000,000 into super this year. I'm going to be one rich old man, ha ha ha.

 

[Knobby22]

I hope you were joking.
No one under 40 should put extra money into super.
Ii is too limiting (can't gear), can't be accessed, not available if a fantastic opportunity arises. The government keeps changing the rules so now you have to be 65 to get it, one day it may be 70.
Many people don't live as long as they think they will.
Live at least a little bit for the moment.

On Stop the Clocks desire to access it to buy a house, you know what would happen? All the property prices would double. Its already crazy out there, we do not want to throw more fuel on the fire.

 

[hilly1981]

I hope you were joking.
No one under 40 should put extra money into super.
Ii is too limiting (can't gear), can't be accessed, not available if a fantastic opportunity arises. The government keeps changing the rules so now you have to be 65 to get it, one day it may be 70.
Many people don't live as long as they think they will.
Live at least a little bit for the moment.

On Stop the Clocks desire to access it to buy a house, you know what would happen? All the property prices would double. Its already crazy out there, we do not want to throw more fuel on the fire.

I dont think the government will change the rules so that you cant access your funds until your 70. I think itll just hit 65 if it does go up. Lately all the rules have changed for the better. However it is all legislative risk and can happen to any investment strategy you undertake.

The idea of it all is that people will have enough in super to live off since the pension will not be available.

If you have a spare 1 million floating around, I dont see the harm in putting it into super. I dont think it is a right or a wrong thing. If you dont make it to preservation age for some reason, then your nominated beneficiary will inherit it.

ctp6360 - Yes you will be one rich old man wont you! lol

 

[Rafa]

do you guys really think the tax on exit of super will remain 0%!

the way the govt changes rules left right and center, i can't see this lasting long... maybe if your over 55 now, you'll be right, but forget about it lasting any more than 5 - 10 years.

 

[Knobby22]

I dont think the government will change the rules so that you cant access your funds until your 70. I think itll just hit 65 if it does go up. Lately all the rules have changed for the better. However it is all legislative risk and can happen to any investment strategy you undertake.

The idea of it all is that people will have enough in super to live off since the pension will not be available.

If you have a spare 1 million floating around, I dont see the harm in putting it into super. I dont think it is a right or a wrong thing. If you dont make it to preservation age for some reason, then your nominated beneficiary will inherit it.

ctp6360 - Yes you will be one rich old man wont you! lol

It is already 65 if you are not a baby boomer.
As RAfa says, the rules will keep changng.

 

[hilly1981]

It is already 65 if you are not a baby boomer.
As RAfa says, the rules will keep changng.

If you were born on or after 01/07/64 then the preservation age is 60. It is not 65 yet. To access your super when your 60 to 64 you need to be permanently retired.

Rafa: Of course the rules will change over the sands of time, however the government will need to keep making super look attractive so people will adequately save for retirement. If only we all had a crystal ball handy so we can see what will happen. At the end of the day there will be no pension so people will need to have a decent sized nest egg to live a comfortable retirement.

 

[krisbarry]

I actually DID put $1,000,000 into super this year. I'm going to be one rich old man, ha ha ha.

Is that you in the pic (avatar), you look all of 20 years of age...where did you get $1 mil from?

 

[krisbarry]

.
Ii is too limiting (can't gear), .

As discussed on many threads before you can gear...I am doing it right now. (Its a manged fund.)

Please check your facts as they are incorrect.

I am currently gearing at about 51%

 

[Julia]

As discussed on many threads before you can gear...I am doing it right now. (Its a manged fund.)

Please check your facts as they are incorrect.

I am currently gearing at about 51%

I imagine Knobby would have been referring to a self managed super fund in which gearing is not allowed, with the exception only (I think) of self funded installment warrants.

Julia

 

[hilly1981]

Is that you in the pic (avatar), you look all of 20 years of age...where did you get $1 mil from?

I tell you what if he is telling the truth he will be stinkin rich

As a rough estimate, if he retires when he is 60 and ONLY had that 1 million without any further contributions etc.. then he would have approx 12.5 million after inflation (at 2.5% per year, and 7.5% interest crediting rate per year). Or around 3.7 million in todays dollars.

If he is a healthy 60 year old when he gets access to that money (strictly assuming the preservation age doesnt rise) then I dont think anyone would turn around and call him stupid for putting that 1 million into super around 35 years back.