Last Weekend Afr's "Chanticleer " reports,$2.7Billion of the high performing $90Billion Uni Super was switched(by its supposedly highly educated members) into the cash option at the worst possible time, the bottom of the market in March.Same deal for Australian Super,$65 Billion from the $200 Billion fund switched into cash.Talk about bad timing!Equity markets were to then rebound 35-40% in just the following 3 months.
Superannuation, the ultimate government cash cow?
- Thread starter drsmith
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THis is a very silly argument. Since when has anyone cared about property prices increasing ? They will increase anyway with or without super. WHat people are worried about is a dwindling supply of tenants.
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That is very true, Australia has doubled its population in the last 50 years mainly by immigration, with that being stalled due to the corona virus there will be a lot of excess capacity in the pipeline IMO.
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Statistics don't account for much, a 65 year old friend who still works changed to cash in March, he lost $5k on a $230k balance, he is now well in positive territory because of contributions since.
Would he have been better leaving the money in the market? Risk and reward is just that IMO.
Equity markets have rebounded, but aren't back to what they were, so it is all subjective IMO.
I would think a lot of people.
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isn't your friend not telling you the full story, unless he was already nearly fully in cash during the feb march period, he would have been hit by the full crash, nowhere near as low as a5% loss.....unless the super fund really screwed up and exchanged his units at an non updated price??
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here in the sunshine coast, with people moving in from Brisbane and the southern states, there is a real tenancy issue: no rental available anywhere and the RE market is booming. Families are living in tents or sheds.
After years of landlord bashing, freeze unpaid rent with the covid measure and pathetic returns on rentals plus worries, people just sell to cashed up southerners and get out of property for renting.Did the same a couple of years ago and just did the same for industrial rentals as well for the same reasons.
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No, they are exact figures, we talked about the virus as soon as it was common knowledge and we on the forum were discussing it I had just read your post of the virus analysis.
He has been my best mate for 50 years, all true figures, we talked he jumped to cash, that was the loss.
I doubt very much he would be in the same position, if he had riden it through, but I could be wrong.
Just gave him a quick call and he is up $2k on where he was, he said a mate at the same workplace is still down on where he was, so might not be apples for apples, but a big loss at 65 takes a lot of recovery.
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Ok, i thought jump to cash at the low....
If he jumped to cash before the crash he won imho as he broke even with zero Risk
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The other thing that comes into the equation is, the snapshot on my SMSF, was taken at 30/6/2020.
That is a pretty $hit time in relation to the virus, my fund was down 12%, since then the banks have recovered and many other purchases have more than doubled, so on 30/6/2021 my fund may well show an improvement of 20%.
But in reality I am still not back to where I was pre the virus, but I can claim it had a profit of 20% this year.
Statistics don't you love them lol.
As an adjunct to super being a cash cow got government, some may be interested in the indexation arrangements applying to the balance cap.
www.ato.gov.au
It will of course depend on the CPI variations applicable.
Note if you have already reached the balance cap and it is increased that does not mean you can add more because of it as your personal balance cap is calculated at a particular point in time. And if you have reached the cap but it's gone down since then, you're out of luck.
For those in pension phase, a proportional aspect will apply but if you're already at the $1.6m tax free, zero will apply.
Indexation of Transfer balance cap
How indexation of the general transfer balance cap impacts your personal transfer balance cap.
It will of course depend on the CPI variations applicable.
Note if you have already reached the balance cap and it is increased that does not mean you can add more because of it as your personal balance cap is calculated at a particular point in time. And if you have reached the cap but it's gone down since then, you're out of luck.
For those in pension phase, a proportional aspect will apply but if you're already at the $1.6m tax free, zero will apply.
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Something we mentioned years ago in this very thread, why should low income earners who get minimal benefit from contributions, be forced to put lock it away fro years. When in reality they have enough already in super.
www.smh.com.au
Take home pay or put it in super: Government considers opt-in super model
Workers could be able to choose to take home more pay or put it into superannuation as part of a proposal the federal government is considering ahead of a coming rise in the super guarantee.
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Interesting article by a left leaning publication, a very interesting last paragraph.
www.macrobusiness.com.au
From the article:
The already excessive cost of superannuation concessions necessarily means there are less funds available in the federal budget to lift the Aged Pension.
If budget sustainability and equity in retirement outcomes was the true goal, there is a strong case to abolish superannuation altogether and to channel the immense budget savings into lifting the Aged Pension.
Because it is the high cost of superannuation concessions that is preventing the pension from being lifted. Lifting the SG to 12% would only make the situation worse.
Superannuation steals from the pension
Industry Super Australia (ISA) continues to lobby the federal government to increase the superannuation guarantee (SG), arguing that if the super rate increase was abandoned, it would “heap pressure on the pension”: ISA said it was vital the legislated increases in the superannuation guarantee –...
www.macrobusiness.com.au
The already excessive cost of superannuation concessions necessarily means there are less funds available in the federal budget to lift the Aged Pension.
If budget sustainability and equity in retirement outcomes was the true goal, there is a strong case to abolish superannuation altogether and to channel the immense budget savings into lifting the Aged Pension.
Because it is the high cost of superannuation concessions that is preventing the pension from being lifted. Lifting the SG to 12% would only make the situation worse.
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At last the sensible way to go forward with super gets some air.
www.macrobusiness.com.au
From the article:
National Seniors Australia chief advocate Ian Henschke wants a universal pension scheme that isn’t means tested.
“By setting income and asset limits which restrict you from, first, getting a pension, and second, limiting your entitlement, it punishes you for having more.”
A universal basic income could, over time, also be good for the government’s bottom line, as it would eliminate the need for massive administration costs.
“It would get rid of the pension assets and income tests, doing away with the need for unfair taper rates, deeming rates and work restrictions, and end the need to engage with Centrelink,” Mr Henschke said in May last year.
“If everyone of pension age received a pension, retirees could just add this to their other income and pay tax. Means testing is costly to administer and leads to perverse outcomes, which are more apparent in the current crisis.
“Asset taper rates unfairly penalise those who save more for their retirement. Income tests undermine ongoing workforce participation and lead to ongoing anger over deeming rates.”
NSA’s proposal makes a lot of sense and could easily be funded by abolishing the compulsory superannuation system, which is overly costly, inefficient and inequitable.
Compulsory superannuation acts like a tax and forces people to forgo current consumption, which is especially pernicious for lower-income earners.
Moreover, because superannuation balances at retirement depend on how long one works and how much they earn, the system inevitably misses lower income earners and those with broken work patterns like mothers.
Compulsory superannuation has also created a massive trough, worth some $30 billion a year, that has attracted snouts across the financial services industry like the big four banks. Australian management fees are among the highest in the world with Australian households spending twice as much each year on superannuation fees as they do on electricity.
Superannuation concessions already cost the federal budget around $43 billion a year and are very poorly targeted to high income earners, who receive the overwhelming majority of taxpayer assistance through the retirement system:
By extension, the massive costs and inefficiency surrounding compulsory superannuation means there are less funds available in the federal budget to lift the Aged Pension – Australia’s genuine retirement pillar.
Given the obscene cost, inefficiency and poor targeting of superannuation concessions, optimal public policy dictates unwinding these concessions and using the money saved to boost the Aged Pension.
Abolishing the compulsory superannuation system in favour of a universal aged pension has merit and should be given detailed consideration.
Scrap superannuation for a universal basic pension
National Seniors Australia (NSA) has called on the federal government to implement a universal pension scheme that isn’t means tested: National Seniors Australia chief advocate Ian Henschke wants a universal pension scheme that isn’t means tested. “Review after review complains about older...
www.macrobusiness.com.au
National Seniors Australia chief advocate Ian Henschke wants a universal pension scheme that isn’t means tested.
“By setting income and asset limits which restrict you from, first, getting a pension, and second, limiting your entitlement, it punishes you for having more.”
A universal basic income could, over time, also be good for the government’s bottom line, as it would eliminate the need for massive administration costs.
“It would get rid of the pension assets and income tests, doing away with the need for unfair taper rates, deeming rates and work restrictions, and end the need to engage with Centrelink,” Mr Henschke said in May last year.
“If everyone of pension age received a pension, retirees could just add this to their other income and pay tax. Means testing is costly to administer and leads to perverse outcomes, which are more apparent in the current crisis.
“Asset taper rates unfairly penalise those who save more for their retirement. Income tests undermine ongoing workforce participation and lead to ongoing anger over deeming rates.”
NSA’s proposal makes a lot of sense and could easily be funded by abolishing the compulsory superannuation system, which is overly costly, inefficient and inequitable.
Compulsory superannuation acts like a tax and forces people to forgo current consumption, which is especially pernicious for lower-income earners.
Moreover, because superannuation balances at retirement depend on how long one works and how much they earn, the system inevitably misses lower income earners and those with broken work patterns like mothers.
Compulsory superannuation has also created a massive trough, worth some $30 billion a year, that has attracted snouts across the financial services industry like the big four banks. Australian management fees are among the highest in the world with Australian households spending twice as much each year on superannuation fees as they do on electricity.
Superannuation concessions already cost the federal budget around $43 billion a year and are very poorly targeted to high income earners, who receive the overwhelming majority of taxpayer assistance through the retirement system:
By extension, the massive costs and inefficiency surrounding compulsory superannuation means there are less funds available in the federal budget to lift the Aged Pension – Australia’s genuine retirement pillar.
Given the obscene cost, inefficiency and poor targeting of superannuation concessions, optimal public policy dictates unwinding these concessions and using the money saved to boost the Aged Pension.
Abolishing the compulsory superannuation system in favour of a universal aged pension has merit and should be given detailed consideration.
As an adjunct to super being a cash cow got government, some may be interested in the indexation arrangements applying to the balance cap.
Indexation of Transfer balance cap
How indexation of the general transfer balance cap impacts your personal transfer balance cap.
It will of course depend on the CPI variations applicable.
Note if you have already reached the balance cap and it is increased that does not mean you can add more because of it as your personal balance cap is calculated at a particular point in time. And if you have reached the cap but it's gone down since then, you're out of luck.
For those in pension phase, a proportional aspect will apply but if you're already at the $1.6m tax free, zero will apply.
The cap will be increased to $1.7m from 1 July 2021 as the December CPI was 117.2.
It's going to be a dog's breakfast in my view with the arrangements for accumulation balances before and after that date as well as income stream where the cap was or is less than $1.6m.
Even a cursory reading of the ATO web-site on the issue will indicate that.
Indexation of Transfer balance cap
How indexation of the general transfer balance cap impacts your personal transfer balance cap.
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The whole thing is going to become a dog's breakfast, as you say Belli.
I have been saying for years the only way you can fix super and the pension, is to make it a universal pension.
It still rewards people who work and contribute to super, but they are taxed on it when it is withdrawn, so people can put away extra for a better retirement. But it doesn't overly reward the super rich and doesn't punish those who work hard and save for a better retirement.
The way it is at the moment, as happened last election, they are only looking at hitting the middle income earner who saves hard all their working lives and actually get less that the pension.
Trying to fiddle away at the edges with more complexity, just stuffs it all up more, super was introduced on a promise of a better retirement.
Now that has changed to super is there to replace your pension, that isn't going to work ever, why would people want to lose wages to save up so that they can lose the pension. Blind Freddy can see that wont work.
All that will happen will be less and less people will want to work, welfare for life will become rampant. IMO
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Just remember universal income is in the Reset program. Everyone receive a fixed set amount, be free to work if you want and can, but you will be taxed on the whole.a program wider than super in utsreach
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Very true, but the present program is, work if you like we will just tax you more for those who can't or don't want to work, so tell me the difference?
Other than at the moment as a self funded retiree, you are spending what you saved, as a pensioner you are earning twice as much, for saving nothing. ?
By the way I'm still just over a year away from a pension, so getting zip from the Government, getting minimal from dividends and interest, so just spending money I saved by not buying expensive cars and not having overseas holidays when I was working.
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I'll put it another way, the pension and superannuation system, as they currently are set up, aren't fit for purpose.
Let's take a simple example using round figures, for ease of working out, rather than for precision.
1. At the moment, someone on $300k who puts money into super, gets a 35% reduction on tax, because instead of paying 50% tax they pay 15%.
Whereas someone on $40K gets no tax break, because instead of paying 15% tax on their income, they paid 15% tax on their contributions.
Wouldn't it be better to just give everyone the pension, give a 15% tax reduction on the marginal tax rate for contributions and tax the earnings at 15%, then tax the pension as normal income or at flat rate e.g 15,20 even 30%.
It has to be easier than what both parties are trying to do at the moment.
Super shouldn't be seen as a rich persons perk, just the same as the pension shouldn't be seen as a lazy persons perk.
Super should be there as it was intended, to enhance a workers retirement not as another indirect tax on workers, to prop up a pizz poor pension system.
Just my opinion.
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fully agree, the NZ system: a minimum pension, taxable for everyone is the way to go, in time of low return, and I do not mention risk, seeing people on the pension getting so much is absolutely gutting, but in a way, I am all for this universal income, it is timed well, I have stopped working and so will we all until the stupidity in the very idea makes it all collapse in a big mess with an economy a la venuzuela and big mining and China holding our corrupt puppet leaders .
I would not push anyone to put money into our kind of super, never have, never will as is
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