Superannuation, the ultimate government cash cow?

[brty]

RY,

Apparently you see that from early 2013 period the deficit got larger too. On whose chart? Not the one I posted. The size of the deficit was shrinking. And yet the Australian dollar fell. How could you conjure this statement?

Isn't the little green squiggly line the deficit, seems to say that on the legend. You can't see it turn down in 2013, at the same time the $Aus does? Maybe you should look again.

1. Did you look at all the documents and references - supplied by others - who confirmed that what I was saying all along was accurate?

I agreed with you that on the macro scale, that is indeed the case. You were implying that on a micro level it would also work. I had a suspicion that it wouldn't, spent quite a few days testing on a random, yes random, not specially selected as you claimed, portfolio; to see how it would go on a relatively small portfolio. On the stocks used, B&H way outperformed over the short term and I identified why. In that portfolio it was some gold stocks and mining services stocks that went down, and stayed down, that ended up with a disproportionate investment in them, and hadn't come back up in price. Likewise there were a couple of outstanding performances in stocks that continued to go higher, that were greatly cut down in profitability, by selling down too early.
Instead of being involved in active discussion on where lines should be drawn in terms of excess investment in one area, you just went the accusation route, of myself being deliberately misleading. Nothing could have been further from the truth, I was interested to if it could work on the small scale. Otherwise I would not have spent so much time doing it.

Perhaps we should try to stick to the topic of Super.

 

[Smurf1976]

If you had a loan when inflation was high, interest rates were high.

Taking out a loan when rates and wages growth are high, followed by a trend of falling rates and wages growth is one thing. Painful at the time but pretty soon it gets relatively easy to repay the loan.

It's a very different story if you take out a loan when rates are low and then they go up unless there is corresponding wages growth. In that situation you're pretty much stuffed.

It comes down to probability. The future is uncertain but looking at where we are today there is a definite risk that we see a rise in interest rates which exceeds wages growth, and a relatively low probability that interest rates fall significantly. That's not based on any serious analysis, simply on noting that rates are very low by historical standards - how much lower can they really go?

It's like saying that your fridge is struggling to stay cold in January in Perth or Adelaide in a house without air-conditioning. Not ideal but things can't get much worse really so if it's just coping then the odds are it will be fine in due course. But it's very different if the fridge isn't coping in Hobart in July, since it's almost certainly going to get hotter at some point. Same scenario for anyone buying their first home etc when rates are very low - there's a very real possibility that they'll see a big rise in rates at some point before the debt is repaid versus not much room for them to go down.

 

[sptrawler]

Taking out a loan when rates and wages growth are high, followed by a trend of falling rates and wages growth is one thing. Painful at the time but pretty soon it gets relatively easy to repay the loan.

It's a very different story if you take out a loan when rates are low and then they go up unless there is corresponding wages growth. In that situation you're pretty much stuffed.

It comes down to probability. The future is uncertain but looking at where we are today there is a definite risk that we see a rise in interest rates which exceeds wages growth, and a relatively low probability that interest rates fall significantly. That's not based on any serious analysis, simply on noting that rates are very low by historical standards - how much lower can they really go?

It's like saying that your fridge is struggling to stay cold in January in Perth or Adelaide in a house without air-conditioning. Not ideal but things can't get much worse really so if it's just coping then the odds are it will be fine in due course. But it's very different if the fridge isn't coping in Hobart in July, since it's almost certainly going to get hotter at some point. Same scenario for anyone buying their first home etc when rates are very low - there's a very real possibility that they'll see a big rise in rates at some point before the debt is repaid versus not much room for them to go down.

People take risks whenever they take loans. If they take a loan to purchase a dwelling comensurate with their earnings, then ensure all their excess money goes into improving their equity, it will work out fine.

The RBA seem to be focused on keeping interest rates and infllation around 3%, pay rises appear to be around 4%.
If there was ever a time to invest without risk, I've never seen it.
At the moment there is a housing construction boom going on.

A lot of SMSF are jumping in.
Just to try and get it back on thread

 

[Julia]

Julia,
Actually, that is exactly what I thought government welfare was all about, to help the down trodden.

Who is talking about the downtrodden? How do you define 'downtrodden'?

I've always been totally clear about believing we should be generous in helping those who really cannot help themselves, ie people with real disability/mental illness, social disadvantage.
But why should we extend that to the people who, eg, through greed put most of their investable capital into some super dupa speculative stock which bombs, rather than take a more realistic approach?
Or those who inherit money, then blow it, or win Lotto and do likewise, falling back onto taxpayer funded welfare? Or, as already discussed, those who take advantage of tax benefited super only to spend the lump sum rather than take it on retirement as an allocated pension?

Not everyone makes the correct choices in life, people make mistakes. They are the people that I want my taxes to go to.

Are you prepared to consider that if there are no consequences to making rash decisions which fail, allowing someone to receive taxpayer funded benefits 'in compensation', we will not be breeding a society of people who value personal initiative and sense of responsibility?

How we separate those that are the bludgers on the system from those that tried and failed is the hard part. Both can present as the same.

Yes, they can at times. But it wouldn't take much research into each individual to discover the path that led to their application for welfare.
The more difficult question is how much right the State has to adjudicate on how anyone should spend what is actually theirs. This is something I'd like to see a public discussion on, perhaps led by Simon Longstaff of the St. James Ethics Centre.

Julia, my point is that there is less space for error for the young today compared to the baby boomer generation. We were the lucky ones with relatively cheap housing, free tertiary education, and easily obtained ongoing employment, plus the helping hand of inflation in paying off our early loans.

I have already acknowledged the great opportunity of property investment during the high inflation period.
Not sure how many actually took advantage of it, however.

I'm glad you felt so lucky. Looking back on my first marriage, during the two years we were engaged (does anyone still get engaged these days?) and several years into the marriage, I worked two jobs and my husband three jobs. I don't think we regarded it as any sort of hardship, just what we needed to do to get the property paid off. Looking back now, remembering my husband coming home several nights a week in the small hours stinking and filthy from working in a rubber factory, and both of us working in a corner shop all weekend, it probably wasn't all that much fun.

 

[brty]

Julia, you are going to extremes,

But why should we extend that to the people who, eg, through greed put most of their investable capital into some super dupa speculative stock which bombs, rather than take a more realistic approach

So the type of people, ordinary hard working people, who thought they were paying for savvy advice from Storm, then lost the lot, house, super etc, you would deny the pension because they made a mistake (ie conned)??

The corner store owner who worked hard all his life developing the business, only to have a supermarket open up around the corner and put him out of business, you would deny the dole (now in his 50's and penniless), then deny the pension, because he made a mistake somewhere along the line in persisting with his store until it's bankruptcy.

Some how you managed to take young people that made simple mistakes and turn them into "greed with their investable capital" and "those who inherit money, then blow it, or win Lotto and do likewise". Please bring it back and look at average ordinary mistakes that are much more common than those.

Are you prepared to consider that if there are no consequences to making rash decisions which fail, allowing someone to receive taxpayer funded benefits 'in compensation', we will not be breeding a society of people who value personal initiative and sense of responsibility?

Andrew Forrest made a rash decision to spend billions of dollars on his own railway and building the company. It could still all fall to pieces. If he loses the lot, does he deserve the pension, if the correct age and asset criteria? Absolutely!!
If there was nothing to fall back on for those who try and fail, then everybody would play safe. Risk taking to advance the economy (via building a company with director guarantees) would go out the window.

 

[sptrawler]

Julia, you are going to extremes,



So the type of people, ordinary hard working people, who thought they were paying for savvy advice from Storm, then lost the lot, house, super etc, you would deny the pension because they made a mistake (ie conned)??

The corner store owner who worked hard all his life developing the business, only to have a supermarket open up around the corner and put him out of business, you would deny the dole (now in his 50's and penniless), then deny the pension, because he made a mistake somewhere along the line in persisting with his store until it's bankruptcy.

Some how you managed to take young people that made simple mistakes and turn them into "greed with their investable capital" and "those who inherit money, then blow it, or win Lotto and do likewise". Please bring it back and look at average ordinary mistakes that are much more common than those.



Andrew Forrest made a rash decision to spend billions of dollars on his own railway and building the company. It could still all fall to pieces. If he loses the lot, does he deserve the pension, if the correct age and asset criteria? Absolutely!!
If there was nothing to fall back on for those who try and fail, then everybody would play safe. Risk taking to advance the economy (via building a company with director guarantees) would go out the window.

We appear again to be drifting from superannuation to all forms of welfare.

I don't think anyone dissagrees with welfare.
I think the issue is arising, from those who want to fund the welfare, by taking from those that have sacrificed to save and be self funded.

We are not talking about the 10,000 that have taken the pizz and put $5m+ in super.

We are talking about the vast majority of self funded, ex working class people that have probably sold all their investments, to put the money in super and be self funded.

Why wouldn't they be worried, a lifetime of saving and doing without, then to be held up as the reason for insufficient government funds.

Maybe the politicians should look at their super first and foremost.

 

[brty]

SP,

We appear again to be drifting from superannuation to all forms of welfare.

I agree, let's get back to super, sorry for going OT, just had to reply to Julia.

I see the greatest problem with super is the constant tinkering of it by governments!!!

How can anyone be assured of anything regarding retirement savings in this form, when we now have the treasurer admitting they are going to change things again ie retirement ages to start with (from Q&A questioning).

 

[sptrawler]

SP,



I agree, let's get back to super, sorry for going OT, just had to reply to Julia.

I see the greatest problem with super is the constant tinkering of it by governments!!!

How can anyone be assured of anything regarding retirement savings in this form, when we now have the treasurer admitting they are going to change things again ie retirement ages to start with (from Q&A questioning).

So true, and it is more worrying for those that saw it as a way to live independently.
They trusted that due to the rules governing super, if they reached a pre set goal, their retirement would in their minds be secure.
Then they get the government, the papers and everyone else saying "your o.k give us some of it". What galls more is politicians saying it, when they have a ridiculous taxpayer funded superannuation, federal and state.

Again I'm not talking about people with stupid amounts in super.
I'm talking about people that may have downsized, sold a business, salary sacrificed and lived of the wifes wage, sold an investment property, normal people.

The hard thing is most of these people would have been disciplined savers working toward that goal.
Now when they have achieved it everyone wants to change the goal posts, they are now not in a position to change their situation, they're retired.
A bit like getting a fixed price contract, then the supplier turning around and saying "no we've changed our minds, you will pay more".
I'm sure most people would kick up.

 

[qldfrog]

+1 and thanks (not God but my government suspicious) I never added more in my super than what was mandatory;
a point which seems lost:
the pension will soon become linked to the CPI and not wages;
if I were a pensionner i would rub my hands:
as per experience in western europe/US:
real wages increases are below CPI : Australia was an exception during the boom, last year wage growth was below CPI (and I will not discuss the CPI figures ..so twisted)
Anyway, Joe has just done a nice present to pensionners and no one realises it

 

[sydboy007]

I see the greatest problem with super is the constant tinkering of it by governments!!!

How can anyone be assured of anything regarding retirement savings in this form, when we now have the treasurer admitting they are going to change things again ie retirement ages to start with (from Q&A questioning).

The problem is that the initial design of super was already flawed. We'd have been better off it super had:

* been run by the Govt or at least had maximum fees set - $20B+ annual cost is simply outrageous when the Norwegians are able to run their SWF at a cost of roughly 0.1%

* been set up to provide a fair level of Govt assistance to all - something like a stabilisation fund so that in good times more was deposited into accounts and during recessions more money was put into the economy to get growth going again. This approach would certainly have helped to manage the resource boom in a much better way.

* tax free super is and will continue to grow as an unaffordable change.

I think bringing back RBLs would be the easiest and fairest way to start limiting the revenue drain of super. That would allow the removal of pre tax annual contribution caps as there's a negative financial consequence to go above the RBL. To make it easier for couples they should allow a combined RBL on a similar basis as to the couples pension so say 165% of the single RBL limit. I would feel Ok with an RBL of ~ $600K for a single and $1M for a couple. before people coplain that is too low, there is nothing to stop people from saving more outside super. $1M in super should easily provide $50-60K a year. I don't see why anyone deserves tax payer subsidies to provide a bigger nest egg. Increase RBL limits based on the pensioner CPI each year.

Limiting lump sum withdrawals also has to be brought in, otherwise how is the system supposed to help alleviate the cost of the aged pension? Why should I help fund a persons super balance only to have them use it to pay off personal debt like a mortgage, buy a new car, go on a holiday and then expect the full pension? The majority of people able to access their super tax some form of lump sum, so it's not a minority doing it issue.

Remember that for every $ of super tax expenditures there has to be a $ of increased taxation elsewhere, or a $ in reduced spending on other services.

 

[Julia]

So the type of people, ordinary hard working people, who thought they were paying for savvy advice from Storm, then lost the lot, house, super etc, you would deny the pension because they made a mistake (ie conned)??

I've not said any such thing. What I would like to see happening is - instead of the government being the proverbial ambulance at the bottom of the cliff - to instead be encouraging people to achieve a basic level of financial literacy so they are not conned. I agree with the government's philosophy of government being there to do for people what they cannot do for themselves.
. I want people to access the considerable amount of financial education that is freely available so that they at least appreciate that any scheme (since you have raised Storm) that has the client access most of the equity of their home to buy shares and then leverage again off that with a margin loan understand that there is no way they can regard such a scheme as a safe investment in retirement. Enough has already been said on the Storm thread about common sense etc.

The corner store owner who worked hard all his life developing the business, only to have a supermarket open up around the corner and put him out of business, you would deny the dole (now in his 50's and penniless), then deny the pension, because he made a mistake somewhere along the line in persisting with his store until it's bankruptcy.

(Sigh.) Such emotive illustrations. No, of course I wouldn't deny him the dole, neither would it happen at least in the foreseeable future. But unless the ever increasing welfare bill is better managed, then the day might come when that dole, even now imo not enough to live on, will not be available.
What I'd like your store owner to do is have a plan B for the likely eventuality - given how the major supermarkets are establishing themselves everywhere - that his business does become threatened.
Does he have a niche to offer, a personal service eg free delivery, home made cakes, anything that will protect him? Or perhaps when preparing his business plan to consider in the first place that such a venture is too risky and he could lose the majority of his investment.

Andrew Forrest made a rash decision to spend billions of dollars on his own railway and building the company. It could still all fall to pieces. If he loses the lot, does he deserve the pension, if the correct age and asset criteria? Absolutely!!

Andrew Forrest is a great example to look at. I understand his early life was a far cry from his present success.
But he has learned from everything that has occurred in his life. And he is resilient. He will always have various options to which he can turn if the current project fails. I very much doubt that the dole would be one of them.

If there was nothing to fall back on for those who try and fail, then everybody would play safe. Risk taking to advance the economy (via building a company with director guarantees) would go out the window.

Good point. But there's a difference between doing something foolhardy and reckless and taking a carefully calculated risk.

I don't know whether I've yet made clear what I'm trying to convey. I am not, as you seem to be suggesting, wanting to remove access to taxpayer funded assistance. But I am very much wanting people to be encouraged to think about how not to need it in the first place. Big difference.

I think the issue is arising, from those who want to fund the welfare, by taking from those that have sacrificed to save and be self funded.

We are not talking about the 10,000 that have taken the pizz and put $5m+ in super.

We are talking about the vast majority of self funded, ex working class people that have probably sold all their investments, to put the money in super and be self funded.

Yes, and those people who are well educated, have had good jobs with high earning, yet just decline to even think about how they might look after themselves in retirement.

My frustration over this whole question has been provoked by essentially two factors:

1. the phrase, heard over and over again: "I couldn't be expected to contribute much to my retirement because compulsory super has only been around for less than half of my working life"
Implicit in this statement is the assumption that the individual has no personal responsibility for his/her own retirement funds.

2. since the Budget (which we are all agreed is unfairly weighted against the poor and disadvantaged, so let's not go there again) pretty much everyone who might be affected in any way at all wailing that they shouldn't be the ones to experience any disadvantage. Always someone else.

So true, and it is more worrying for those that saw it as a way to live independently.
They trusted that due to the rules governing super, if they reached a pre set goal, their retirement would in their minds be secure.
Then they get the government, the papers and everyone else saying "your o.k give us some of it".

Correct. And this has already started. Self funded retirees who previously qualified for the Commonwealth Seniors Health Card which provides some concessions with electricity, rego, PBS etc, will from next year have any income from Super included in the means test of $50,000 p.a. So here's one of the first disincentives for making the effort to be self funded if you're doubtful about it in the first place.

I don't disagree with it, btw, but it's a good example of what you're saying, sptrawler, about people having planned and then having that plan changed because the government need your money to fund someone else.

Again I'm not talking about people with stupid amounts in super.
I'm talking about people that may have downsized, sold a business, salary sacrificed and lived of the wifes wage, sold an investment property, normal people.

The hard thing is most of these people would have been disciplined savers working toward that goal.
Now when they have achieved it everyone wants to change the goal posts, they are now not in a position to change their situation, they're retired.
A bit like getting a fixed price contract, then the supplier turning around and saying "no we've changed our minds, you will pay more".
I'm sure most people would kick up.

Agreed.

Limiting lump sum withdrawals also has to be brought in, otherwise how is the system supposed to help alleviate the cost of the aged pension? Why should I help fund a persons super balance only to have them use it to pay off personal debt like a mortgage, buy a new car, go on a holiday and then expect the full pension? The majority of people able to access their super tax some form of lump sum, so it's not a minority doing it issue.

Remember that for every $ of super tax expenditures there has to be a $ of increased taxation elsewhere, or a $ in reduced spending on other services.

+1.

 

[Wysiwyg]

People are still being weened off the pension mentality. Once we reach the stage where someone's whole working life has had CS paid into a fund then the pension should be a thing of the past. It has been running for about 22 years so the magic of compounding hasn't had time to work even if you started in 1992. Try 50 years of CS and a sizable sum will be available for both the financially savvy and the financial dumbo's. Based on this days Superann. structure of course.

 

[Junior]

People are still being weened off the pension mentality. Once we reach the stage where someone's whole working life has had CS paid into a fund then the pension should be a thing of the past. It has been running for about 22 years so the magic of compounding hasn't had time to work even if you started in 1992. Try 50 years of CS and a sizable sum will be available for both the financially savvy and the financial dumbo's. Based on this days Superann. structure of course.

I agree wysiwyg. Too often I'm hearing that the current super structure is inadequate and most retirees won't have enough. It's b/s.

For someone who started their working life with Super Guarantee contributions, you're working for 40-50 years and your employer is paying 9-12% into a fund through this period...assuming financial markets go OK over this period you should have more than enough, especially for a couple. Add to that some assets outside of super and some extra contributions from age 50 onwards, should be plenty unless the Government start taxing the hell out of it.

 

[sydboy007]

I think it boils down to what you consider an adequate retirement income.

On the east cost over 2/3 of people earn less that $52K a year

I did a few basic excel calcs and found:

52K with 3% inc growth and 6% fund earnings over 45 years you'd end up with neat $1.7M but then with inflatin at 2.5% that would be equivalent of $600K in todays $$.

Personally I think 3% income growth is maybe unrealistic - I've not had a pay rise near that for nigh on a decade.

So if I chance income growth to 2.5% we get a final balance in current $$ of $514K

Considering inflation has been relatively high for a while what happens if it averages 2.75% - that $1.7M is worth just $413K

Remember, we're talking about an income level that only 1/3 of people earn at or more.

What does things look like for someone on 40K a year - $429K in current $$$ (2.5% inf and 3% inc growth) or $385K if inflation is 2.75%

I've yet to see a reasonable definition of what a retirement income should be like, and usually they're quite high so as to involve travel and other luxuries, but is it fair to force ALL tax payers to subsidies this kind of lifestyle? Should super only be about providing a decent to basic level of income - certainly better than the pension - of say $35K for a single and $50K for a couple. Remember that under current policies with no tax payable they're actually better off than 35-40% of current income tax payers. Factor in a lot of people at pension age are mortgage free then they would have far more disposable income than maybe half of the working population.

 

[Wysiwyg]

I think it boils down to what you consider an adequate retirement income.

I think it boils down to what one prepares to have as a retirement income. Now more than ever people have control over their Super nest egg. Most mates at my workplace think Super will look after itself and accept the default investment option which just happens to be low risk low return. Less than 40 years old and the care factor is zero.

On the east cost over 2/3 of people earn less that $52K a year

Accurate data is extremely important when hypothesising, albeit conservatively, on future outcomes. Below is the average weekly earnings according to the Australian Bureau of Statistics data Nov. 2013.

$1400/week * 52 weeks is $72800/year both sexes.

Personally I think 3% income growth is maybe unrealistic - I've not had a pay rise near that for nigh on a decade.

That is odd. I have had a 4% increase per year for the last three years with the company offering same again for next three years. Right across the board people earn more or less. For me it was a matter of changing employers.

Should super only be about providing a decent to basic level of income - certainly better than the pension - of say $35K for a single and $50K for a couple.

Yes yes yes. The secret is that people have the choice of creating so much more inside Super via choice of Super Fund, Salary Sacrifice, Personal Contributions and Investment Options. Outside of Super people have their own financial goals or not.

 

[medicowallet]

Accurate data is extremely important when hypothesising, albeit conservatively, on future outcomes. Below is the average weekly earnings according to the Australian Bureau of Statistics data Nov. 2013.

$1400/week * 52 weeks is $72800/year both sexes.

Average is different to medians / percentage over $x

though there is such a difference, you both could be wrong

MW

 

[k.smith]

I think it boils down to what one prepares to have as a retirement income. Now more than ever people have control over their Super nest egg. Most mates at my workplace think Super will look after itself and accept the default investment option which just happens to be low risk low return. Less than 40 years old and the care factor is zero.

Accurate data is extremely important when hypothesising, albeit conservatively, on future outcomes. Below is the average weekly earnings according to the Australian Bureau of Statistics data Nov. 2013.

$1400/week * 52 weeks is $72800/year both sexes.


That is odd. I have had a 4% increase per year for the last three years with the company offering same again for next three years. Right across the board people earn more or less. For me it was a matter of changing employers.

Yes yes yes. The secret is that people have the choice of creating so much more inside Super via choice of Super Fund, Salary Sacrifice, Personal Contributions and Investment Options. Outside of Super people have their own financial goals or not.

The average of $20k + $40k + $60k + $80k + $10,000k is $2040k
but 4 out of 5 fall below $80k. Talk of average wage income does not reflect the true position of more than 60.7% of the population who earn less than $52,000
see table 2
http://www.abs.gov.au/ausstats/abs@.nsf/mf/5673.0.55.003

An individual with an income of $72,800 p/a has a much better chance of being able to save enough to provide for his/her retirement than an individual on an income of less than $52,000.

Wage growth of 4% is certainly not "average"..! !

http://www.abc.net.au/news/2014-02-19/abs-figures-show-annual-wages-growth-slowest-on-record/5269480

"...The Bureau of Statistics wage price index (WPI), which looks at hourly pay rates excluding bonuses, rose just 0.7 per cent in the December quarter and 2.6 per cent over the past year.

ABS director of the wage price index Robin Ashburn says that is the smallest annual increase on record.
"The growth in wages over the last year of 2.6 per cent, seasonally adjusted, was the smallest through the year rise since the series commenced in 1997," she noted in the report.

Wages growth is so low that it has slipped below the inflation rate, as measured by the ABS consumer price index (CPI).....''

 

[sydboy007]

The most recent median income figure I can get is ~47K.

So if we assume a 45 year working life, 3% income growth, 6% earning, 2.5% inflation, 9.25% SGC, then based on that and no extra contributions over a working life a final balance of $1,533,508 or 505K in current $$.

At a 6% yield that should produce a $30K income which is around 8K higher than the current single rate pension or an increase of 36%.

The fact is less than half the population will achieve that kid of balance without extra contributions. Anyone on less than $35K a year will struggle to have a super balance that can realistically provide more than the current pension - likely around 30% of the working population.

I honestly don't think that the Government should be providing expensive tax expenditures to provide for much above that kind of income.

A 650K single RBL and 1M combined RBL is around where I think Govt support should be capped. If people want a retirement with overseas travel and the luxuries of life then save outside super to fund that, but for me I feel super should be purely to provide a slightly better life than what the current pension offers. It's already an expensive policy with $30-35B in tax expenditures growing at 12% and $20B+ in fees to managed it. A policy that costs more than the problem it's designed to resolve is not in my view has not been targeting to problem very well

 

[Julia]

So, Syd, if your above suggestions were to be taken up by government to provide the income you describe as slightly better than the current age pension, would you anticipate that should replace the age pension?

 

[k.smith]

The most recent median income figure I can get is ~47K.

So if we assume a 45 year working life, 3% income growth, 6% earning, 2.5% inflation, 9.25% SGC, then based on that and no extra contributions over a working life a final balance of $1,533,508 or 505K in current $$.

At a 6% yield that should produce a $30K income which is around 8K higher than the current single rate pension or an increase of 36%.

The fact is less than half the population will achieve that kid of balance without extra contributions. Anyone on less than $35K a year will struggle to have a super balance that can realistically provide more than the current pension - likely around 30% of the working population.

I honestly don't think that the Government should be providing expensive tax expenditures to provide for much above that kind of income.

A 650K single RBL and 1M combined RBL is around where I think Govt support should be capped. If people want a retirement with overseas travel and the luxuries of life then save outside super to fund that, but for me I feel super should be purely to provide a slightly better life than what the current pension offers. It's already an expensive policy with $30-35B in tax expenditures growing at 12% and $20B+ in fees to managed it. A policy that costs more than the problem it's designed to resolve is not in my view has not been targeting to problem very well

View attachment super_charter_report.pdf

The projections here are based not on 9.25% but 12% and

* the amount of people who will receive the FULL age pension will decline
* the amount of people receiving a part pension will increase
* there will be a gradual increase in retirement income for people alongside the pension.
* the Henry review Retirement income consultation paper issued in December 2008 discussed that the amount of concessions are "heavily weighted" to individuals on higher personal tax rates.

http://www.crikey.com.au/2014/05/14/...witcher=mobile

''...The Australia Institute showed in 2009 that the top 5% of income earners obtain 37% of all superannuation tax concessions....''

And that, imo is the issue that we should be discussing in this forum. Taxpayers are supporting a public superannuation system where their taxes pay more towards the retirement fund of a "wealthy" contributor than an contributor in the category that more than 60% of us fall into. While some here have pointed out that if this were to change, i.e if the tax concessions were to be less favourable to individuals on higher personal income tax, their behaviour would change, and they would look for tax reductions elsewhere, isn't that a separate issue? Others have spoken at length how the onus lies on people to accept responsibility to save for themselves. I agree, but I do not agree that it is possible for many to do so on low incomes where 60.7% of wage earners earn less than $52k, and where about 36% earn less than $32k. Is it right that a person earning $52k pays around $8447 in taxes, has little $$ left after his living expenses to save for retirement, but where his taxes supports a super system which advantages the minority?