Superannuation, the ultimate government cash cow?

[sptrawler]

Another article questioning the superannuation system, at least it is being challenged, rather than telling everyone it is the best thing since sliced bread.
Not that I'm against it, just that I think it all needs to be kept in perspective, it was initially introduced to give people a better retirement, I think that idea has been long forgotten.
https://www.macrobusiness.com.au/2020/02/compulsory-superannuation-is-fueling-household-debt/

 

[Junior]

At last some commentators are starting to see sense regarding super, they are saying what has been said on ASF for years.

https://www.macrobusiness.com.au/2020/02/forget-superannuation-lift-the-aged-pension/
From the article:
In its submission to Treasury for the Retirement Income Review, Mercer has called for a universal non-means tested Age Pension to be considered in place of raising the superannuation guarantee:
The submission said the universal Age Pension would:

• Ensure financial decisions made by retirees were not informed by how to best maximise their access to the Age Pension;
• Provide retirees with greater security of income with the knowledge of longevity protection, leading to a better quality of life;
• Provide stronger incentives to downsize from the family home, improving housing affordability for younger families; and
• Enable a simpler, more efficient system with reduced administration costs incurred by the Government from the means-tested Age Pension.

“While the universal Age Pension may not be a viable option in the current political environment, it is a compelling proposition for a simpler, more effective system with a clear objective that delivers stronger long-term retirement outcomes for older Australians,” Knox said.

Jeez at last Hooray.

This is far too intelligent to ever become a reality. You can see the sob stories now, about how a handful of wealthy individuals receive Age Pension, and how that's unfair....then we revert back to a horribly inefficient means-tested system.

 

[sptrawler]

This is far too intelligent to ever become a reality. You can see the sob stories now, about how a handful of wealthy individuals receive Age Pension, and how that's unfair....then we revert back to a horribly inefficient means-tested system.

It just makes absolute sense doesn't it Junior, everyone gets the pension and if people wish to save for a better retirement they can, but the super is treated as income and taxed.
It would give some confidence that the money being taken off the workers, is actually for their benefit, not just another Government tax.

 

[Junior]

It just makes absolute sense doesn't it Junior, everyone gets the pension and if people wish to save for a better retirement they can, but the super is treated as income and taxed.
It would give some confidence that the money being taken off the workers, is actually for their benefit, not just another Government tax.

Yes. Furthermore, age pension is taxable income. So those wealthier individuals will end up giving 30% + back to the Government in income tax anyway.

You could have the same payment to everyone, and then have a separate supplement for those who really need it, that kicks in when your assets fall below $100k or $200k or so. That way you're only means testing those who need the extra payment to get by.

 

[PZ99]

I said in another thread the Govt might release some superannuation to keep things going.

Superannuation raid to help jobless survive

https://www.afr.com/policy/economy/superannuation-raid-to-help-jobless-survive-20200318-p54b8d

 

[Bill M]

I said in another thread the Govt might release some superannuation to keep things going.

Superannuation raid to help jobless survive

https://www.afr.com/policy/economy/superannuation-raid-to-help-jobless-survive-20200318-p54b8d

Whilst I may have said before that this might be a bad move I have now changed my mind due to the severe change of events. This is a crisis we have never seen before, people need to pay their mortgages and put the food on the table and we have to allow all means for them to be able to survive. Who would have ever thought that there would be 100's of thousands of people being stood down with no pay. A very sad situation beyond any individuals control, we need to do/allow anything to get us all through it.

 

[qldfrog]

I am not a fan of mandatory super but the timing for taking money out of super can not be worse after a 30pc market fall..sure it could fall more but hopefully people are now in safe options;
I yesterday requested my fund to move 10% into growth option..very small move back in.
Have been 100% in capital guarantee since january and saved buckets

 

[PZ99]

I was 100% cash until the XAO hit 5700.. but having said that I missed out on some of the market gain prior to that. Still saved a truckload here though.

It's now 70% cash and it'll drop to 20% if the XAO drops below 4k (I don't think it will)

I think it's better to allow people to access their super during times like this rather than cash handouts.

It becomes their own debt to repay rather than the country paying it (we are already in record debt)

 

[qldfrog]

I was 100% cash until the XAO hit 5700.. but having said that I missed out on some of the market gain prior to that. Still saved a truckload here though.

It's now 70% cash and it'll drop to 20% if the XAO drops below 4k (I don't think it will)

I think it's better to allow people to access their super during times like this rather than cash handouts.

It becomes their own debt to repay rather than the country paying it (we are already in record debt)

Better for the country, not the indviduals..moreover we might need both...

 

[PZ99]

Better for the country, not the indviduals..moreover we might need both...

Well I guess anything that's good for the country is good for the individuals when it comes to Govt debt. At the moment we're all paying interest on half a billion and that will stretch out .

The age of entitlement is almost over

 

[qldfrog]

Half a trillion you mean..i know
So big figures we lose count
the interest alone are over a billion a month....or one thousand millions a month..just interest not capital repayment...imagine the hospital ICUs you can build for that...thanks to Rudd and then all governments since
Just splash money, get elected rince and play again..and here we are...

 

[Humid]

Half a trillion you mean..i know
So big figures we lose count
the interest alone are over a billion a month....or one thousand millions a month..just interest not capital repayment...imagine the hospital ICUs you can build for that...thanks to Rudd and then all governments since
Just splash money, get elected rince and play again..and here we are...

If you reckon that started with Rudd your kidding yourself

 

[qldfrog]

If you reckon that started with Rudd your kidding yourself

Here comes the labour fanatics
If you remember, under Costello, funds were complaining there was no more bond issued.as such there was a push to artificially create some....
In the circumstances, at the time, yes Sir, there was No debt and A balanced budget...
Obviously a balanced budget in 2005 does not mean you can offer the same services in 2009 and be balanced.
Rewritting history again, next Australia was saved by Swan and the Rudd stimulus, not China etc etc?
The worst is that you probably even believe your fake facts
Education has failed this country.

And in case you were even a bit attentive, i mentionned since Rudd. Which includes many liberal governments inc the current one

 

[Humid]

Here comes the labour fanatics
If you remember, under Costello, funds were complaining there was no more bond issued.as such there was a push to artificially create some....
In the circumstances, at the time, yes Sir, there was No debt and A balanced budget...
Obviously a balanced budget in 2005 does not mean you can offer the same services in 2009 and be balanced.
Rewritting history again, next Australia was saved by Swan and the Rudd stimulus, not China etc etc?
The worst is that you probably even believe your fake facts
Education has failed this country.

And in case you were even a bit attentive, i mentionned since Rudd. Which includes many liberal governments inc the current one

You obviously don't count little Johnnies middle class welfare splurge to get re elected

 

[Humid]

Considering Labor have been in power for 6 of the last 20 odd years who is the fanatic

 

[Humid]

If you reckon that started with Rudd your kidding yourself

In case you were even a bit attentive
That's it in black and white ffs

 

[PZ99]

Here we go... https://www.theguardian.com/austral...worst-hit-by-coronavirus-but-can-we-afford-it

Australians who are laid off as a result of the coronavirus outbreak will be allowed to pull money out of their superannuation, Scott Morrison announced on Sunday.

Withdrawals will be capped at $10,000 this financial year, and a further $10,000 next financial year, and will be tax-free, the prime minister and his treasurer, Josh Frydenberg, said.

The withdrawals will be available from April to those eligible for the coronavirus supplement as well as sole traders whose hours or income has fallen 20% or more as a result of coronavirus.

 

[Belli]

(make sure you check your Trust Deed to ensure this is permitted as some Deeds only allow payment of a pension)

A thought just came to mind. The Government is permitting people to withdraw $10k this and next year from super. Guessing it also applies to SMSFs. People may need to check the SMSF Trust Deed allows for that whether it is in accumulation phase, pension phase or both.

May be wise to get some legal/financial advice before you do anything. Of course if the Deed does require amendment that $10k is initially going to cost $10.5k or thereabouts as a result of obtaining the advice.

 

[Dona Ferentes]

I said in another thread the Govt might release some superannuation to keep things going.

Superannuation raid to help jobless survive

https://www.afr.com/policy/economy/superannuation-raid-to-help-jobless-survive-20200318-p54b8d

I just wish emotive language (raid) wasn't used. ...but they can't help themselves

 

[sptrawler]

An interesting article, about whether the super funds have enough in cash, I know if a SMSF doesn't have enough to cover their obligations they can be in trouble with the ATO.
This issue presenting itself, is the very reason I started a SMSF, as I have always said, it is a worry when someone else has control of your nest egg.
https://www.smh.com.au/business/ban...tep-up-for-their-members-20200329-p54f0e.html
From the article:
Funds are expected to have more than adequate liquidity to endure even the harshest downturn in markets and customers switching between funds and investment options.

Retirement savings are the private nest eggs of Australian workers. Those who are facing financial hardship in the current crisis need access to their money now.

It should not be forgotten that hardship grounds already exist for early access to super.

The new measures streamline those requirements to make sure Australians get access to their funds without having to wait until they are at risk of losing their home.

Many people are losing their livelihoods and are struggling to buy the essentials. It is time for super funds to step up and help their members.


What the government is asking the industry to do is modest, reasonable and necessary. Treasury estimates the policy will result in about $27 billion being withdrawn from the $3 trillion superannuation system – less than 1 per cent of total super savings.

Reports that some super funds are liquidity constrained must therefore stem from issues pre-dating notification of the government’s stimulus package, and even the outbreak of the pandemic itself.
Superannuation funds which may have overextended into illiquid assets, such as infrastructure and property and who did not retain adequate cash and other liquid holdings, did so knowing the risks they were adopting.
The strong investment returns on illiquid assets is, in fact, referred to as the ‘illiquidity premium’, a reward for the risk funds are willing to adopt when they buy these lumpy assets that are hard to sell.


To tout strong investment returns off the back of illiquid assets in the good years, only to come to the government cap in hand when markets inevitably turn, is simply a sign of bad management and poor investment governance.
The opening paragraph of APRA’s Prudential Standard for Investment Governance requires a superannuation fund “to have in place a sound investment governance framework for the selection, management and monitoring of investments... including investment risk.”

The standard requires regular stress testing which reflects the underlying assets the fund owns, and board oversight of the results of stress tests.