Superannuation, the ultimate government cash cow?

[over9k]

Oops, got the facts wrong, again . Blinded by too many zeros. Should read half a million, not Billion ($ 544 Million to be precise ). A lot of dosh there, for just 2 people, possibly 4 under the old rules up to the start of July, this year.
Following on; Liberal MP Jason Falinski recons there should be MORE $ 100 Million SMSF's than the current 27 ! And the rules should not now be changed retrospectively .
Not much noise from Labor, yet, but the Gratten Institute is livid and shadow treasury spokesman, Jim Chalmers commented that tax concessions should be "sustainable and equitable". Fair enough. There won't be any more of these biggies, so.........

Nothing will happen. The political left is unelectable and the libs know it.

 

[Knobby22]

Nothing will happen. The political left is unelectable and the libs know it.

And the political right are too scared.
Superanuation Tax breaks to a few extremely wealthy and connected families that matches the total pension bill. Nothing to see hear.
They know they will eventually lose it but not till our budget situation is desperate.

 

[Knobby22]

Should point out it was the Libs under Turnbull who removed the loophole.
At the time they said if they left it in that the amount would equal the defence budget within a few number of years.

 

[Belli]

Even now there is a slight tweak favouring some. The temporary halving of the required drawdown rate. I fully admit I have, and will, take advantage of that. I've sufficient investment income outside of the superannuation structure to be able to do it. Plus with the cracker of a year last FY, the $1.6m component (I no longer qualify to contribute to superannuation) of the SMSF is way above that. The accumulation component is also very heathy.

 

[dyna]

Jeremy Cooper, now Challenger's chairman of retirement, makes an interesting point in today's AFR. Research shows a retiree with a $million in super, owed a 1/3 rd of this balance to tax concessions. Outside of super, he would only get $ 650,000.
The Grattan Institute is screaming about superannuation tax breaks costing the budget $35 Billion in lost revenue, with 1/2 of the benefits going to the top 1/5 th of income earners who already have income to fund their own retirement.
Challenger and Mercer's research suggests retirees drawing down an extra 1.5% each year ( just $4,300 ) would help the economy with a $9 Billion increase in GDP .

 

[mullokintyre]

Jeremy Cooper, now Challenger's chairman of retirement, makes an interesting point in today's AFR. Research shows a retiree with a $million in super, owed a 1/3 rd of this balance to tax concessions. Outside of super, he would only get $ 650,000.
The Grattan Institute is screaming about superannuation tax breaks costing the budget $35 Billion in lost revenue, with 1/2 of the benefits going to the top 1/5 th of income earners who already have income to fund their own retirement.
Challenger and Mercer's research suggests retirees drawing down an extra 1.5% each year ( just $4,300 ) would help the economy with a $9 Billion increase in GDP .

Statistics, as one of our resident data experts here points out, not many people understand data analysis.
I presume that the $9bill increase in GDP is because of the multiplier effect, because there is no guarantee that
(a) The retirees would spend the extra,
(b) they would invest into something that generates income and thus attract some taxation.
I presume they mean all retirees drawing down extra, but they obviously don't understand the thinking of so many retirees.
They will not spend the extra just because they have to take it out, in fact because so many want to preserve their capital, they may actually reduce some spending.. and keep it in a non interest bearing check account. (My mother in law did just that - gifted the ANZ bank over a million bucks for 15 years because she did not want to pay extra tax on the earnings which she could not spend anyway living in a nursing home).
The top 1/5th would most likely have their affairs setup in trusts, companies and whatever other tax minimalisation vehicles their accountants and lawyers set up for them.
Someone who has a million bucks in Super and takes out 5% per year as pension , assuming a paltry return of 2% p.a has over 20 years before there is nothing left. For most retirees, thats probably enough, as retiring at 65, you will not need a lot of spending money at 85, assume you are lucky enough to live that long. But self funded retirees (I am one of them, and so many of my contemporaries er also) don't think like that.

 

[divs4ever]

And the political right are too scared.
Superanuation Tax breaks to a few extremely wealthy and connected families that matches the total pension bill. Nothing to see hear.
They know they will eventually lose it but not till our budget situation is desperate.

it is a well-known fact that

governments LOSE elections ,

however the LNP may easily become too egotistical and ignore the minor parties or a coalition of them , the ALP is not the only game in town

and veteran Albo might actually have a winning strategy .. let the LNP irritate everyone

( i prefer Katter , but unless a miracle happens ... )

 

[divs4ever]

Statistics, as one of our resident data experts here points out, not many people understand data analysis.
I presume that the $9bill increase in GDP is because of the multiplier effect, because there is no guarantee that
(a) The retirees would spend the extra,
(b) they would invest into something that generates income and thus attract some taxation.
I presume they mean all retirees drawing down extra, but they obviously don't understand the thinking of so many retirees.
They will not spend the extra just because they have to take it out, in fact because so many want to preserve their capital, they may actually reduce some spending.. and keep it in a non interest bearing check account. (My mother in law did just that - gifted the ANZ bank over a million bucks for 15 years because she did not want to pay extra tax on the earnings which she could not spend anyway living in a nursing home).
The top 1/5th would most likely have their affairs setup in trusts, companies and whatever other tax minimalisation vehicles their accountants and lawyers set up for them.
Someone who has a million bucks in Super and takes out 5% per year as pension , assuming a paltry return of 2% p.a has over 20 years before there is nothing left. For most retirees, thats probably enough, as retiring at 65, you will not need a lot of spending money at 85, assume you are lucky enough to live that long. But self funded retirees (I am one of them, and so many of my contemporaries er also) don't think like that.

yes i agree with your logic

i was planning NOT to draw-down ( unless desperate ) and HOPING that stocks DRPed ( not everything is geared to give cash divs ) will grow and help resist inflation

that was the plan right back in 2010 , given recent twists and turns , all i can do is sit and watch if i get close ( to correct strategy )

yes my plan seems complex but that is the joy of self-managing your retirement plan

 

[Dona Ferentes]

Astonishing figures in today's AFR for the top SMSF's.

I'm not astonished. If you look at the disclosed top 20 holders of any IPO, there are a mix of custodians (for institutions/ fund managers), SMSFs, trusts and individuals.

If the IPO does well, and share price increases, then the early investors will be sitting on a tidy sum. If it slumps, then it's a tiny sum. I would suspect the really big SMSFs are the likes of APT or a mining speccie like CHN.

Until bits of the holding are sold, then there is little tax (only envy). IPOs generally don't usually pay dividends for a while, and if sold, CGT will apply, at a lower rate as the assets would mainly, overwhelmingly, be in an Accumulation account.

 

[divs4ever]

I'm not astonished. If you look at the disclosed top 20 holders of any IPO, there are a mix of custodians (for institutions/ fund managers), SMSFs, trusts and individuals.

If the IPO does well, and share price increases, then the early investors will be sitting on a tidy sum. If it slumps, then it's a tiny sum. I would suspect the really big SMSFs are the likes of APT or a mining speccie like CHN.

Until bits of the holding are sold, then there is little tax (only envy). IPOs generally don't usually pay dividends for a while, and if sold, CGT will apply, at a lower rate as the assets would mainly, overwhelmingly, be in an Accumulation account.

well IF you have a full service broker ( and an 'institutional account ) your broker rings YOU really early so you can buy some of that pre-IPO action ( and he/she gets a nice commission , maybe even from both ends of the trade )
BECAUSE if there isn't enough interest at the big end of town the IPO goes nowhere ( not even close to listing )

however getting to be important enough for your broker to ring you ( when you don't owe money ) is the difficult bit ( i only got mine because of a super helpful BSL employee on that SPP at 40c ( pre-consolidation, )

 

[Dona Ferentes]

well IF you have a full service broker ( and an 'institutional account ) your broker rings YOU really early so you can buy some of that pre-IPO action ( and he/she gets a nice commission , maybe even from both ends of the trade )
BECAUSE if there isn't enough interest at the big end of town the IPO goes nowhere ( not even close to listing )

I suggest you read the Top 20 holdings more closely. They are the entrepreneurs, the directors and senior management (and family)

Serious wealth needs an good accountant/ private wealth adviser, but it is a well trodden path..

 

[divs4ever]

nearly all of them with a higher nett worth than me , and that was my point , if you pay the bucks you get the service ( sometimes )

i NORMALLY don't pay the bucks because i rarley take big positions in one bite ( the BSL SPP was the exception )

i am very happy to carefully accumulate , even if the brokerage looks forbidding ( over time )

nibbling small lets me sample illiquid shares without dstorting the market

now if others use different strategies , that is fine by me , less competition , where i want to play ( i am quite happy to be the only frog in the puddle , as long as there is something in there i desire )

 

[qldfrog]

nearly all of them with a higher nett worth than me , and that was my point , if you pay the bucks you get the service ( sometimes )

i NORMALLY don't pay the bucks because i rarley take big positions in one bite ( the BSL SPP was the exception )

i am very happy to carefully accumulate , even if the brokerage looks forbidding ( over time )

nibbling small lets me sample illiquid shares without dstorting the market

now if others use different strategies , that is fine by me , less competition , where i want to play ( i am quite happy to be the only frog in the puddle , as long as there is something in there i desire )

I know of another frog in that muddy puddle ?

 

[divs4ever]

I know of another frog in that muddy puddle ?

WHAT ?? do you hold ATM , TRA and MPP also ???

 

[qldfrog]

WHAT ?? do you hold ATM , TRA and MPP also ???

Not at all, just a frog..

 

[divs4ever]

am just cold to touch now ( heart/circulation issues ) but still don't mind being someplace ( or stock ) all alone for years

i should check some of the 'bottom drawer stocks , sometimes i am half the yearly trading volume ( and i normally buy small )

it looks funny to fill an order in three part-filled orders spread over several months all for $10 or $15 brokerage total

 

[dyna]

This week, APRA's spokesperson said the 13 superannuation funds that failed its performance test, should consider exiting our $ 3.3 Trillion superannuation sector. A couple of those duds happen to be Industry funds ( the 40,000 member Electrical Workers and the Transport Workers Union Super ) with a combined $ 12 Billion under management.
APRA thinks these funds need at least $ 30 Bill to be competitive.
One of the Corporate no-hoper superannuation funds was CBA Bank's own employer fund.
Industry fund REST ( 1.8 million mainly young, hospitality workers ) barely made it over the acceptability line.

 

[divs4ever]

i wonder if the tests will still apply when the market REALLY melts down and much bigger funds drift into negative yields as well

just asking

 

[qldfrog]

i wonder if the tests will still apply when the market REALLY melts down and much bigger funds drift into negative yields as well

just asking

Indeed, to pass the bar, a fund can just invest in vangard etf and that is ok

 

[divs4ever]

NOT so OK if you don't subscribe to their ESG agenda

but of course the peasants are always expected to 'take one for the team '