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Superannuation, the ultimate government cash cow?

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damned ( or doomed) if you listen to a politician is my opinion

be greedy .. think for yourself
 
This is the down side side with Superfunds working hand in glove with a political party IMO and does highlight why your super, isn't thought of as your money.
In the Superannuation a Government cash cow thread we have always said that when those drawing down, exceed the contributions being put in and the super funds have to generate their own earnings, the ponzi will implode.
Well it looks like that time is fast approaching, all the members with all the accrued earnings may well ask for them, I think the funds would find that somewhat embarrassing and as I said in the other thread we may well end up back at the RBL's and minimum/maximum drawdowns.
Things are certainly moving along, I wonder how long before this morphs into, the super has to be spent before someone qualifies for any pension.
History repeating, we were the same as the U.K, NZ and Canada where a part of income tax was set aside for pensions, then it was decided to pay pensions out of consolidated revenue, then means testing, then superannuation was started and the income tax associated was removed and a new income tax started, then asset and income testing, next ?
I certainly hope they throw the family home into the mix, or everyone will be removing their super to upgrade the home, which will put more upward pressure on house prices.



 
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sptrawler said:
half of retirees draw down the minimum pension and they have on average a quarter of their money left when they die,
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sptrawler said:
retirees were holding on to their super and passing it to their children when they could use it instead to live a better life.
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Both of these statements are too general in my view to be able to draw any valid conclusions without seeing the actual data on which they are based and other financial information. At an individual level, the statements don't take into account the spending/living requirements of the households.

For example, I draw the minimum retirement pension of $7k per month. Last FY my basic requirement in order to keep the roof over my head (rates/utilities/ health/house/car insurances/registration) I need around $12k per year. That leaves $6k per month. That is approximately double the married rate age pension As a single person, given my personal approach, that is more than sufficient for me. In addition, I have a very good, again my view, investment income outside of superannuation. Result is I have no requirement to draw down an amount greater than the minimum.

The obvious point I am making is generalised statements do not reflect specific household needs. Some may need to, or possibly should, draw down more of their superannuation if necessary whereas a number do not need to. That is the information missing from those generalised statements.
 
Belli, I am more than happy to assist you in spending that extra 6k per month.
Mick
 
I'll throw out some random thoughts of mine about what I perceive is occurring. Bear in mind, I could be,and probably am, completely wrong.

The first aspect is the move by industry funds to becoming more and more involved with their members retirement income. The Retirement Income Covenant (now part of the SIS Act) has been mentioned previously in this thread. The move is actually moving into the realm generally reserved for Financial Planners.

However, with the reforms of financial advice, many good planners left the industry and those remaining are required to reach specified educational requirements. This, along with additional compliance requirements, has the effect of forcing up costs and so prices. As a result, many of those who would like to obtain financial advice cannot afford it. It would not surprise me if industry funds have gotten into the ear of Government to carve out an exemption to step into that gap for financial planning. The proposals to encourage a greater consumption of superannuation is nothing more than what an FP would do for their clients taking into account the overall household financial situation.

The other issue in my view is the Treasury Estimates of Foregone Revenue. Link is here: https://treasury.gov.au/sites/default/files/2023-02/p2023-370286-teis.pdf. Government looks at revenue forgone as a tax expenditure.

Table 1.1 indicates concessional taxation of superannuation is currently estimated as $21.5B. Essentially, the greater one can reduce that the greater the Government income.

With those issues in mind, it isn't a surprise there are proposals to increase the tax on large superannuation balances or to encourage greater consumption of superannuation through various means.

Whether it works remains to be seen.
 
Belli said:
I have no doubt you would. However, my children have first dibs and I cannot be bothered with all the paperwork involved in adopting you. Sorry.
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that's fine , i would probably annoy by watching the stock-market all day and posting on forums , slowing your bandwidth
 
sptrawler said:
everyone will be removing their super to upgrade the home
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This scenario will really take off come 1st July 2025 when Jimbo's 30 % tax begins on all those $ Billions currently paying 15 % in accounts above the new $ 3 mill limit.
If you thought Sydney R.E. prices cannot possibly get any more crazy, just you wait.
Those with big blocks will be going bananas with the rebuilds. Remember , this place is now a world class city , on a par with N.Y. , San Francisco and even " knife capital of the world " , dear old London.
While the international demand grows ever more desperate , the poor old Aussie buyers become irrelevant .
 
Well even the leading Industry Fund isn't above shonky behaviour, as usual it will be soon forgotten.

Watchdog sues AustralianSuper over 90,000 duplicate accounts

ASIC has taken the country’s biggest super fund to court for failing to merge duplicate accounts, which cost members about $69 million.
www.smh.com.au

The corporate watchdog is taking legal action against AustralianSuper, the country’s largest super fund, for failing to identify and merge duplicate accounts for about 90,000 members, charging them multiple sets of fees and insurance premiums.

On Friday, Australian Securities and Investments Commission (ASIC) deputy chair Sarah Court said the regulator had commenced civil penalty proceedings against the trustee of AustralianSuper over problems that resulted in members being overcharged $69 million.
 
Problem is, the super fund will most likely be paying the fines, not the fines, not the administrators who oversee it all.
The members lost out when the fund did not do anything about the duplicate accounts, and they will lose out when fines are levied.
Mick
 
sadly most likely , but would be happy to be proved wrong
 
I don't understand why they need the fines. Australian Super has corrected this issue. I can only think they want to send a warning shot to other funds as they all have been slow to act and maybe they need the money to help run the organisation.
 
Hmm, the implications are that maybe a Binding Death Benefit Nomination isn't binding no matter the assurances provided by superannuation funds.

The need for a further certificate indicates to me that insurance issues could have been involved but why that cannot be treated as a separate matter to paying out the the superannuation balance itself is beyond me. The demand for an additional certificate certainly would not be certifying the lady was still alive!

Superannuation payout delays throw spotlight on 'harrowing' ordeal for families

Since his partner's death, John's been locked in a lengthy battle with one of Australia's largest funds to get her super paid out. He's not alone, with the country's peak advocacy group calling for an end to lengthy delays and further grief for families.
www.abc.net.au

I recognise Trustees can be sued if they get it wrong, yet...............
 
Interesting article on how much you need to have in super for a great lifestyle in retirement.
I do love the matter of fact way they say last year it was $X and one year later it is $X+10% and if inflation keeps going going the value of the original $X keeps falling and the drawdown required keeps increasing to cover the inflation induced drop in buying power.
I personally don't think $690K is enough to sleep well at night, but that's only my personal thoughts.

https://www.smh.com.au/money/super-...axed-retirement-cost-now-20230912-p5e41n.html
So, what’s the bottom line? How much does it cost to live, if not large, then live a little in retirement?

A comfortable retirement is now said by ASFA to set back singles $50,207 a year and couples, $70,806.
Just over $30,000 ($31,867) will if you are single see you live modestly, while $45,947 will if you are in a couple.
What, then, is the lump sum required to generate these standards of retirement?
Not as much as you think, assuming – as ASFA does – that you both own your own home by retirement and thus have no accommodation costs, and that you draw down all your capital over time and also receive a (growing) portion of the government age pension.
As it explains in its detailed assumptions document: “In March 2023, ASFA revised the modest and comfortable lump sums needed to reflect the high rate of inflation, and that there has been no real increase in the age pension as price growth has been greater than the increase in average wages.”

While a lump sum of $545,000 was previously said to be sufficient for a single to retire comfortably, and $640,000 for a cost-sharing couple, today the amounts are $595,000 and $690,000 respectively. So, yes, these are higher than last year. But no, they are not a probably impossible $1million.
 
A lot of assumptions in that. Considering how few people in my generation are able to afford a house right now, those figures aren't that realistic.
 
My, my. An interesting read.

Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 | Treasury.gov.au

The Government is consulting on the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 (the Bill) and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023, to enact changes to superannuation tax concessions announced in the 2023-24...
treasury.gov.au

A delve into it raises a number of issues. Those with DB pensions looks like they will be included by multiplying the annual pension by 16 and not by referring to any balance cap. This may impact a number with high DBs and should the spouse who also has a DB, and subsequently receives a reversionary benefit and possibly other super, may be in for a nasty surprise.

If a person cannot pay the tax on amounts over $3m, it will be a deferred debt attracting 10.4% (compounded daily) and payable by the deceased estate.

Suggest people fire up a spreadsheet and crunch numbers for their individual situation in order to be prepared and, when necessary, adopt an appropriate strategy (sorry DB pensioners but it doesn't seem you have one.)
 
For those who still contribute to superannuation keep an eye on the AWOTE. There is a distinct possibility the concessional contribution amount (and non-concessional as it is four times the concessional amount) will increase to $30k pa next July. Also, depending on the CPI, the balance cap could also increase. A 5.5% annual rate would do it based on $1.9m. Getting closer to that $3m non-indexed amount isn't it?

To be honest, I am bemused how a simple concept of saving for one's retirement in a concessionally taxed environment has become complicated through political debauchery starting with allowing people for a limited period to contribute $1m non-concessional, passing legislation not taxing earnings or pension payments in retirement mode, to trying to reign in the cost of those concessions via introducing Div 293 on higher income earners, introduction of balance caps and now the possibility of taxing amounts of $3m.
 
Belli said:
Getting closer to that $3m non-indexed amount isn't it?
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It's still possible that the non-indexing of the $ 3 mill limit could get knocked on the head in the senate.
Anyway , the Libs are not going to be out of power , forever. They sure won't let it stand .
How many elections to go ?......Three ? maybe only two.
 
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