Superannuation, the ultimate government cash cow?

[DocK]

Sounds like a tough spot to be in DocK. Can't offer any insight or experience but I hope it works out for you and your family.

Thanks McLovin.

A friend of mine is in a similar situation.
He is in his late 50's, he has his mother of 95 living with him, now his wife has left for greener pastures.
his Aunt (mothers sister) is 97 lives alone, but he is the only relative that looks after her, does her shopping, goes to her place 60k's each way twice a week.
By the way he is an only child and his aunt has no children.

What he did was get power of attorny along with his cousin. It seems to be working, I think he`said she was much happier to agree when there were two involved.

I'm just gratefull I'm not in the same position.

Best of luck.

Thanks Sptrawler - unfortunately my mother, brother and myself are her only living relatives, so providing balance from cousins etc is not possible. Hard enough for the three of us to agree on a course of action sometimes

Not rambling at all and more relevant to the topic than we might wish.

Approaching your aunt's vagueness etc via her GP sounds sensible. I don't know what the situation is if the GP were to do tests and find her cognitive function diminished. Presume he'd then ask for an ACAT assessment.
At best that's going to see her persuaded into some form of assisted living which she might resent. The fine line your family seems to be treading is one of maintaining her limited confidence whilst having her understand that you are primarily concerned for her welfare. To put that to a very independent, strong minded person is not easy.
I wish you all the best and hope you might let us know how it goes, as many people will be in a similar situation.

Thanks Julia. The single thing I dread most about the aging process is the possibility of diminishing mental facility. It's sad to see people who've been very sharp all of their lives slowly deteriorate - I can only imagine how frustrating it must be for them. On that note, although it sounds rather callous, my aunt's general health seems to be declining rapidly and I sorta hope she fades away physically faster than mentally. I'm quite sure she'd prefer to pass away from illness with her mental faculties mostly intact, rather than linger for years in a state of dementia. However - what will be will be, and we'll just have to take things as they come.

wow Julia,
that must be hard, and sadly I see some trouble coming in that way with my dad.
Add the complexity of a different country, stubbornness and two different tax systems and you have a nasty cooking pot....
All this is a bit off subject but we should all remember that our sharpness of mind may fade one day and we always leave the mess behind while gliding into senility.And SMSF will not ease the problem

Exactly right - this issue is one that will become an increasing concern as modern medicine ensures that people live longer - with the result that their physical health may outstrip their mental health. I guess when the average life expectancy was "three score years and ten" most would fall off the perch before they started to lose their mental grip. I try to remember this when dealing with my teenagers - they may very well be the ones I need to wipe the drool off my chin one day

Sorry to derail this discussion but hopefully some find this useful.

Some of the issues raised lately in this thread will cause some big legal problems as the population ages. (snip)
A lot of these issues have been black and white in the past. However with a large ageing population and their large asset pools there could be a lot of legal wrangling going on that did not happen in the past. I am sure some of the policy around this will need to be looked at.

Indeed. One of the problems is agreement on a course of action by the children/relatives of the diminished person. My brother and I disagreed vehemently on the treatment my father should receive (or not) at the end of his life, which could probably have been avoided had he made a health directive or at least set out in writing his wishes. It's a difficult thing for some to confront the matter of their eventual passing, or decline in mental ability, but it does make things so much easier for those that are left to care for them if they have a directive to follow.

Anyway, enough of this morbidity - let's get back to discussing whether the loss of tax revenue that could have been levied on super contributions should really be considered as a cost. It occurs to me that a tax not charged is not really a cost, but an aged pension paid definately is. I can't get away from the idea that if the present cost of providing the incentive to self-fund retirement eventually results in saving the real cost of taxpayer funded aged pensions, then surely that's a good thing? Much as I don't like the idea of gummint telling me what I can and can't do with my voluntary contributions - maybe severely limiting the amount/% of lump sum taken from super is a better one. If you were 30 and told that all concessionally taxed super contributions, whether by employer, salary sacrificed or voluntary had to be taken upon retirement as a lifetime annuity style pension - would you still contribute in order to gain the present tax advantage and the future retirement security? I guess you could consider it a quid pro quo of sorts - tax break now but no lump sum later.......

 

[DocK]

We will see what happens now that it is out in the open. I don't think I've ever heard them say 'the baby boomers can't retire' before.
They usually, skirt around the issue and talk about defering and encourage more participation, the tone is changing.

http://www.heraldsun.com.au/news/na...ster-mark-butler/story-fndo471r-1226579826498

That article was a good read - makes a fair bit of sense to me. I think the key issues are society's attitude toward older people, and the flexibility of career/job opportunities for the over-60's. I know quite a few people who have retired and then decided to seek part-time work a few years later as they've become bored or decided they need a little extra income, or both. In a lot of careers there is only the choice of working full-time or retiring. Most over 60's have reached the stage where their expenditure is much less than those years they were supporting and educating dependant children, paying off the home loan etc. I'd be surprised if there weren't quite a lot that would relish the opportunity to continue in a satisfying career on a part-time or jobshare basis. It's something that the spouse and I have considered for the future - rather than sell our business outright down the track, we may be better to simply employ a manager and admin staff and scale back our own involvement whilst still keeping a hand in and an eye on things.

 

[FlyingFox]

We will see what happens now that it is out in the open. I don't think I've ever heard them say 'the baby boomers can't retire' before.
They usually, skirt around the issue and talk about defering and encourage more participation, the tone is changing.

http://www.heraldsun.com.au/news/na...ster-mark-butler/story-fndo471r-1226579826498

+100. Amazing how governments skirt around difficult issues until they are just about to explode. This is about to hit everyone very hard! Perhaps not the best thread to discuss this but I wonder how this will impact wage inflation.

They must have put something in the water in Canberra cause the PM was talking about the strength of the Aussie dollar and how it may not fall any time soon and therefore we need alternatives to traditional manufacturing etc.

 

[sptrawler]

That article was a good read - makes a fair bit of sense to me. I think the key issues are society's attitude toward older people, and the flexibility of career/job opportunities for the over-60's. I know quite a few people who have retired and then decided to seek part-time work a few years later as they've become bored or decided they need a little extra income, or both. In a lot of careers there is only the choice of working full-time or retiring. Most over 60's have reached the stage where their expenditure is much less than those years they were supporting and educating dependant children, paying off the home loan etc. I'd be surprised if there weren't quite a lot that would relish the opportunity to continue in a satisfying career on a part-time or jobshare basis. It's something that the spouse and I have considered for the future - rather than sell our business outright down the track, we may be better to simply employ a manager and admin staff and scale back our own involvement whilst still keeping a hand in and an eye on things.

Sounds like a great idea to me Dock.
I retired nearly two years ago and I'm thinking of picking up a bit of work, something to get me out of the house a couple of days a week.

 

[prawn_86]

rather than sell our business outright down the track, we may be better to simply employ a manager and admin staff and scale back our own involvement whilst still keeping a hand in and an eye on things.

A few of my clients as an exit plan tend to sell the business and in the sale contract have a defined period where they act as a part-time consultant to the new owners

 

[Julia]

We will see what happens now that it is out in the open. I don't think I've ever heard them say 'the baby boomers can't retire' before.
They usually, skirt around the issue and talk about defering and encourage more participation, the tone is changing.

Mr Butler's comments are imo sensible and realistic. It's probably going to be difficult, though, to apply any general rule about retirement age/access to government pension across the population. If someone has worked all their lives as a labourer, then sheer physical wear is likely to mean they can't go on bricklaying or whatever until into their 70's. A completely different story for, say, an academic.

I don't think it would be unreasonable - if bipartisan support could be achieved - for as much as half accumulated Super to have to be taken as an annuity. But they have to stop fiddling with the rules and allow people to properly plan for their retirement. It's unfair to let people think they will have full access to their Super at retirement age if that's not going to be the case.

Re part time work, I think that's a great idea and I see more and more people doing this. I was relieved to be able to retire quite some years before retirement age, but the downside is the lack of challenge and intellectual stimulation. Both are healthy imo.

 

[sptrawler]

Mr Butler's comments are imo sensible and realistic. It's probably going to be difficult, though, to apply any general rule about retirement age/access to government pension across the population. If someone has worked all their lives as a labourer, then sheer physical wear is likely to mean they can't go on bricklaying or whatever until into their 70's. A completely different story for, say, an academic.

I don't think it would be unreasonable - if bipartisan support could be achieved - for as much as half accumulated Super to have to be taken as an annuity. But they have to stop fiddling with the rules and allow people to properly plan for their retirement. It's unfair to let people think they will have full access to their Super at retirement age if that's not going to be the case.

Re part time work, I think that's a great idea and I see more and more people doing this. I was relieved to be able to retire quite some years before retirement age, but the downside is the lack of challenge and intellectual stimulation. Both are healthy imo.

The problem with the annuity idea is who runs it?
Currently, most annuities I have read about, seem to be very lucrative to the provider, not to the recipient.
Much fairer, I feel to tax withrawls with an offset, as is done currently with those between 55 and 60.

 

[sydboy007]

After reading a bit about the debt markets and what's available I would urge anyone looking at an annuity to consider purchasing:

Inflation Link Bonds
Indexed Annuity Bonds
Floating rate securities

Purchasing a combination of these will provide a stable, relatively secure income stream that is hedged against inflation.

Throw in a 15% weighting to high yield shares and you shouldn't have too much trouble, especially if you have a 12-24 month cash buffer

 

[sptrawler]

After reading a bit about the debt markets and what's available I would urge anyone looking at an annuity to consider purchasing:

Inflation Link Bonds
Indexed Annuity Bonds
Floating rate securities

Purchasing a combination of these will provide a stable, relatively secure income stream that is hedged against inflation.

Throw in a 15% weighting to high yield shares and you shouldn't have too much trouble, especially if you have a 12-24 month cash buffer

Where would you start looking for those style of products Sydboy?

 

[Julia]

Where would you start looking for those style of products Sydboy?

If you just google them you will get lots of links.

 

[sptrawler]

If you just google them you will get lots of links.

Thanks Julia, I really should have thought of that.

I'm going to have to employ you as my I.T manager, did you notice how I sliced and diced a post the other day.

 

[McLovin]

Superannuation tax concessions are unsustainable and will need to be scaled back, the chief executive of the country’s largest industry superannuation funds has warned.

Ian Silk, boss of the $60 billion AustralianSuper scheme, urged all sides of politics to come together to decide on retirement savings policies because watering down the tax breaks on a piecemeal basis was short term and damaging consumer confidence.

“It is inevitable we won’t be able to maintain the current tax settings on super. This is not about arguing for more taxes but a recognition that the current settings pose a huge problem for any government,” Mr Silk said.

Treasury recently estimated that the cost of tax concessions on super would rise to $45 billion in 2015-16 from $32 billion this year.

Mr Silk’s warning comes as Treasurer Wayne Swan is looking for ways to improve the federal budget’s bottom line, with some in the super industry predicting the government will look to take about $1 billion out of super.

http://www.afr.com/p/home/super_tax_concessions_unsustainable_7mqSYeSVU0xJzbn870L08K

 

[Ijustnewit]

Tax Breaks Scrapped ? He we go more Gillard Class Warfare. :1zhelp:

http://www.abc.net.au/news/2013-03-27/wong-signals-sustainable-budget-super-changes/4597050

 

[Boggo]

Take it from Super and spend it on welfare so her supporters can sleep in comfortably while the rest of us work ! FFS

Seriously, I had 5 and 5 super before the super guarantee was mandatory...
"Superanuation is only in this country because Labor brought it here - otherwise ordinary working people wouldn't have super, only some high income earners would.

"So I can assure people super is a Labor creature, we will always nurture it well, and any decisions we make will be about the long-term interests of the superannuation system."

 

[FlyingFox]

Don't see how something that is widely believed to unsustainable should be considered class warfare. If the head of a large super fund says it's unsustainable, then they must be some truth in the matter??

Also if the current government doesn't do it, the next one will have to or the one after that .... Better to have a sustainable and consistent policy that isn't fiddled with every few years to get votes.

The alternative might be that they just take a 10-20% haircut from super balances in the future

 

[drsmith]

A new analysis of superannuation payments commissioned by the activist group GetUp! shows that the wealthiest 10 per cent of Australians pocket a third of the tax breaks.

When one considers who gets what out of retirement funding, the pension and other benefits also need to be considered.

http://au.finance.yahoo.com/news/super-industry-nervous-over-budget-094645023.html

Don't see how something that is widely believed to unsustainable should be considered class warfare. If the head of a large super fund says it's unsustainable, then they must be some truth in the matter??

Labor just wants to tax it more to fund its waste and fantasies.

Reform of retirement income support needs to be considered in a much broader context than that.

 

[FlyingFox]

Labor just wants to tax it more to fund its waste and fantasies.

Reform of retirement income support needs to be considered in a much broader context than that.

See my previous comment about this government or the next. When push comes to shove, the coalition will do the same. They just need to come up with a sustainable set of policies that will not get touched for the next 10-20 years at least.

Agree with your second point.

 

[drsmith]

See my previous comment about this government or the next. When push comes to shove, the coalition will do the same.

They have past form on that (superannuation surcharge), but it will be for the repayment of debt (hopefully) which is more fiscally responsible than Labor's priorities.

 

[Garpal Gumnut]

Tax Breaks Scrapped ? He we go more Gillard Class Warfare. :1zhelp:

http://www.abc.net.au/news/2013-03-27/wong-signals-sustainable-budget-super-changes/4597050

Anyone with super, in a SMSF or an Industry Fund has rocks in their head if they vote this Labor government back in.

Penny Wong has said super will be hit, and hit hard.

Any other also rans in the ALP who argue otherwise have no say.

If you haven't already I would, to those with super who can, suggest starting a pension, examine stocks held for possible capital gains realisation before the budget and sticking your head between your legs.

gg

 

[drsmith]

They have past form on that (superannuation surcharge), but it will be for the repayment of debt (hopefully) which is more fiscally responsible than Labor's priorities.

At least this time they're being honest,

His opposition counterpart Mathias Cormann said the superannuation industry and parliament's independents should rally against such changes now, before it was too late.

“We don't want to see any increase in taxes targeting superannuation,” he said.

“But if the government increases taxes on superannuation in the budget and spends all the money as they usually do, we cannot give a guarantee that we will fix up all the damage on day one.”

https://www.aussiestockforums.com/forums/newreply.php?do=newreply&p=762956