Superannuation, the ultimate government cash cow?

[banco]

I agree with you, the problem is what about the blue collar workers, who have been saving in super rather than the bank?

It is still their money, if they paid full tax on it, well it is like putting it in the bank, isn't it?

If they stop lump sum withdrawals, will it include the tax free component?

Well if said blue collar worker takes out a lump sum and pisses it away on cruises etc. and five years later gets the pension then they become the taxpayer's problem.

I understand with the disability pension if say you are in an accident and would otherwise be eligible for the disability pension but receive a compensation payout the Government will say to you "that payout should last 5 years and you'll be ineligible for the disability pension during those 5 years so make it last".

If people could take lump sum withdrawals on the proviso that they are ineligible for the pension for a certain number of years (depending on the size of the withdrawal) that would be one thing but we aren't going to do that so restricting lump sum withdrawals is the only option.

 

[banco]

I really don't understand this sort of thinking. What's wrong with aspiring to be a self-funded retiree?

I have no intention of ever taking any pension and living off the fairly meagre income that would allow that. My aim is to have enough retirement funds to generate an income many times in excess of the pension.

Getting funds into concessionally taxed super will help achieve this, so it makes perfect sense to be putting extra in now.

Yes but why should the taxpayer help you generate an income many times in excess of the pension through favourable tax concessions?

 

[Bill M]

This is a prudent recommendation because it will only affect wealthy pension recipients - those who own a home (of any value), with additional assets of $100,000 or more for singles and $150,000 or more for couples. For Morrison, it is also appealing because it avoids the debate about whether to count the family home in the means test.[/I] My bolds

What a silly idea, so the family home won't be counted and you are only allowed 100K in assets. Here's what will happen, people will simply sell their average homes and put most of their money into high end expensive ones and leave themselves with a $100K in the bank. Then Centrelink picks up the tab for a full pension, medical and other freebees. Isn't this what we are trying to avoid? Oh, and house prices keep going up.

 

[sptrawler]

Well if said blue collar worker takes out a lump sum and pisses it away on cruises etc. and five years later gets the pension then they become the taxpayer's problem.

I understand with the disability pension if say you are in an accident and would otherwise be eligible for the disability pension but receive a compensation payout the Government will say to you "that payout should last 5 years and you'll be ineligible for the disability pension during those 5 years so make it last".

If people could take lump sum withdrawals on the proviso that they are ineligible for the pension for a certain number of years (depending on the size of the withdrawal) that would be one thing but we aren't going to do that so restricting lump sum withdrawals is the only option.

So the only people who are eligible for pensions, are those who spend all their money on cruises, holidays, flash cars, during their working lives.

To me, that is double dipping.

Why should the person, who saves during his/her working career be discriminated against, when they want to spend it?
As opposed to those who spent all their money and are eligible for a handout.

 

[sptrawler]

I see Nick Xenophon is suggesting tightening the asset test for "wealthy pensioners".

I wonder if he will be including himself in the list, doesn't he have 20 investment properties?

Will he be taking his taxpayer funded tax free politicians pension, or will he say he shouldn't qualify.

 

[DB008]

Letting people take lump sum super payouts, then having them on the pension defeats the purpose of super.

It should be an investment vehicle and gives the owner an income (like dividends) to survive on, instead of them relying on the Government for help.


David Murray was on Richo+Jones (Sky) a few weeks ago. He was brilliant and they spoke about 'super'

http://www.skynews.com.au/video/program_richojones/2015/03/18/richo---jones-march-17.html

 

[Ferret]

Yes but why should the taxpayer help you generate an income many times in excess of the pension through favourable tax concessions?

I'm not saying they should, and I expect there will be changes to this.

Still, these exist at the moment so back to the point I was making - Why do you need your head read for taking advantage of this?

 

[sptrawler]

Letting people take lump sum super payouts, then having them on the pension defeats the purpose of super.

It should be an investment vehicle and gives the owner an income (like dividends) to survive on, instead of them relying on the Government for help.


David Murray was on Richo+Jones (Sky) a few weeks ago. He was brilliant and they spoke about 'super'

http://www.skynews.com.au/video/program_richojones/2015/03/18/richo---jones-march-17.html

I agree you shouldn't be able to take lump sums from your concessionally treated super. I feel you should be able to take lump sums from your tax free component.

To say you can only take your tax free component as a pension, is the same as telling people they can't withdraw lump sums from the bank.

For example someone has $200k in the bank, he gets $6,000 interest tax free and most of his pension. He wants a holiday or a car or to upgrade his house, he just withdraws the money.

The same person puts the $200k into super after tax, your saying he can only withdraw it as a pension, sounds weird to me.

 

[DB008]

I agree you shouldn't be able to take lump sums from your concessionally treated super. I feel you should be able to take lump sums from your tax free component.

To say you can only take your tax free component as a pension, is the same as telling people they can't withdraw lump sums from the bank.

For example someone has $200k in the bank, he gets $6,000 interest tax free and most of his pension. He wants a holiday or a car or to upgrade his house, he just withdraws the money.

The same person puts the $200k into super after tax, your saying he can only withdraw it as a pension, sounds weird to me.

All l said;

Super should be used a vehicle that gives you dividends so that you shouldn't have to rely on the Government

If you take a lump sum payout, spend it all, then you are on the Government pension and back to square one

 

[sptrawler]

All l said;

Super should be used a vehicle that gives you dividends so that you shouldn't have to rely on the Government

If you take a lump sum payout, spend it all, then you are on the Government pension and back to square one

Yes, but I said all money in super hasn't been given a tax concession.

What is the difference between taking a lump out of your bank account, or taking a lump out of the tax free component of your super account.
Both enable the person to access the pension.

All of this hype, will only stop people putting voluntary contributions into super, a person can hold $500k outside of super and pay no tax.
Why would they put it in super, if they are going to be told how they can spend it.

Don't get me wrong, I'm pulling a self funded pension and had no thought of pulling any lumps of money out.
The current political talk about super, is making me have second thoughts, in case they do enact something stupid.

 

[banco]

Yes, but I said all money in super hasn't been given a tax concession.

What is the difference between taking a lump out of your bank account, or taking a lump out of the tax free component of your super account.
Both enable the person to access the pension.

All of this hype, will only stop people putting voluntary contributions into super, a person can hold $500k outside of super and pay no tax.
Why would they put it in super, if they are going to be told how they can spend it.

Don't get me wrong, I'm pulling a self funded pension and had no thought of pulling any lumps of money out.
The current political talk about super, is making me have second thoughts, in case they do enact something stupid.

All money in super has been given a tax concession (unless your accountant is an idiot).

 

[sptrawler]

All money in super has been given a tax concession (unless your accountant is an idiot).

If the money was put in non concessionally, it hasn't been given a tax concession, its earnings may have.

However, now that the tax free threshold has been lifted to $18k.
I doubt there is much advantage for having super, if the account balance is less than $300k.

 

[Bill M]

Yes, but I said all money in super hasn't been given a tax concession.

What is the difference between taking a lump out of your bank account, or taking a lump out of the tax free component of your super account.
Both enable the person to access the pension.

All of this hype, will only stop people putting voluntary contributions into super, a person can hold $500k outside of super and pay no tax.
Why would they put it in super, if they are going to be told how they can spend it.

Don't get me wrong, I'm pulling a self funded pension and had no thought of pulling any lumps of money out.
The current political talk about super, is making me have second thoughts, in case they do enact something stupid.

I agree with everything you say. Right now I am waiting for the May budget, if there is anything detrimental to my super savings then I will be pulling the lot out of one of my funds. Restricting people on what they can do with their money under rules they have abided by for the last 25 years will destroy the super industry.

 

[Bill M]

All money in super has been given a tax concession (unless your accountant is an idiot).

If the money was put in non concessionally, it hasn't been given a tax concession, its earnings may have.

That is exactly right. 70% of all my super contributions were put in non concessionally (after tax).

 

[sptrawler]

That is exactly right. 70% of all my super contributions were put in non concessionally (after tax).

That is the whole problem Bill, Labor has demonised super, and everyone thinks it is money that has had a tax advantage. You just have to read what banco says, to realise everyone has half ar$ed understanding of the system.

I'm the same as you 65% of the money in my super is tax free and like you, I will be looking at removing a chunk to fall under the $18k tax free threshold outside of super.

Also the wife can get $18k tax free outside of super, then you can spend it as you like.

Funny I liked the idea of never claiming a pension, now I think it is a stupid old fashioned idea, get with the younger generation.

Super is going to be a basket case, wait and see the funds scream with the reduction of non concessional contributions.lol

 

[sptrawler]

I agree with everything you say. Right now I am waiting for the May budget, if there is anything detrimental to my super savings then I will be pulling the lot out of one of my funds. Restricting people on what they can do with their money under rules they have abided by for the last 25 years will destroy the super industry.

Just a thought Bill, may be time to evaluate AMP etc.

 

[Pager]

About half my super is non concessional and I still have a few years before I retire, so hope im not going to regret doing that

I have a feeling that much of what is speculated has been exaggerated by the media, so any new measurers and restrictions wont be anywhere near as severe or restrictive as we think, all the same this has highlighted to me that in the coming years the government of the day could change the rules and there would be not much I can do about it, so having my money in and out of super is maybe a good idea, not so tax effective now but I really think there is another risk factor we need to take into consideration when putting additional funds into super.

So despite what happens in May and what promises are made (if any) I will be adding very little additional funds other than employer and salary sacrifice if its tax effective to do so in the future.

 

[sptrawler]

At last some of the experts are telling the truth about super.

http://www.smh.com.au/business/the-...ugh-to-retire-in-comfort-20150419-1modsc.html

One of the better statements in the article says:

In the quest to ensure our super taxes are equitable, there's the potential for heavy collateral damage to be sustained to a large cohort of the people we're trying to help. These are the middle-income households hoping to accumulate sufficient nest eggs to mainly self-fund a reasonably comfortable retirement," said Mr Cooper, who chaired the super system review in 2010.

 

[sydboy007]

At last some of the experts are telling the truth about super.

http://www.smh.com.au/business/the-...ugh-to-retire-in-comfort-20150419-1modsc.html

One of the better statements in the article says:

In the quest to ensure our super taxes are equitable, there's the potential for heavy collateral damage to be sustained to a large cohort of the people we're trying to help. These are the middle-income households hoping to accumulate sufficient nest eggs to mainly self-fund a reasonably comfortable retirement," said Mr Cooper, who chaired the super system review in 2010.

yet no one actually comes out and specifies what a self-funded reasonably comfortable retirement is.

If the $$ foregone in tax revenue are greater than the $$ saved via lower pension payments, and the revenue lose benefits a small wealthy percentage of the population, then how is the current overly generous system benefiting taxpayers, especially gen x and those that come after them?

 

[sptrawler]

yet no one actually comes out and specifies what a self-funded reasonably comfortable retirement is.

If the $$ foregone in tax revenue are greater than the $$ saved via lower pension payments, and the revenue lose benefits a small wealthy percentage of the population, then how is the current overly generous system benefiting taxpayers, especially gen x and those that come after them?

I'm talking about never pulling any Government pension, not topping up your retirement with part pension.

With $1m you will end up on a Government pension, be it full or part.

I think people should aim to have enough, that you can have a comfortable retirement and never claim a Government pension.

If interest rates were at the long term norm of 7 - 8%, $1m would possibly be adequate.

However the likely hood, of a low interest rate environment prevailing for some time, seems more probable.

If that proves correct $1m will be no where near enough.

As you have said before, RBL's would cap the amount of concession being given.