I mean the $XXX saved over the threshold of $375k
I wouldn't be writing if I could save +$375k in a year
Superannuation, the ultimate government cash cow?
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I mean the $XXX saved over the threshold of $375k
I wouldn't be writing if I could save +$375k in a year
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The issue is not so much the ordinary peole like yourself and most on this forum.
The issue is that removing RBLs has turned super from saving for retirement to tax minimisation for the wealthy.
There's is no reason to allow people to accumulate 5 10 100 million in super.
All that's needed is to bring back some form of RBL so that there's no benefit in accumulating excessive amounts.
Super tax concessions are growing at 3 times the aged pension. It will soon see more devoted to super tax expenditures than the aged pension. To my way of thinking that's not a smart way of dealing with a problem when you spend more than it costs.
I'd be Ok with tax free super, but any lump sums should be taxed. I don't see why it's fair to allow someone to take the money out of super and spend it to then get an increased pension.
It would be relaatively easy to resolve the issues around super, because any changes would only affect a few people, and I doubt anyone is going to feel much sympathy to someone on tonday tonight complaining how they can no longer have over say $1M in super, which is far FAAARRR above what most will ever accumulate. Only 2.4% of people were impacted by RBLs, so one has to ask why they were removed. I think the argument was they cost to much to administer, but he explosion of SMSFs since is testament to the effectiveness of keeping super for retirement income instead of as a tax shelter.
Changes will be made. It'll just be if we decide to make them, or the downgrade of the ratings agencies forces us to.
Agreed... why should taxpayers collectively support wealth creation for the top end ?
Super tax concessions for 2016-17 are projected to cost $50.7 bil.
The top 10% get around 40% or $20 bil, or around half the total cost of the aged pension:
http://www.treasury.gov.au/Policy-T...alysis-of-superannuation-taxation-concessions
and
http://www.smh.com.au/federal-polit...at-are-killing-the-budget-20140421-zqx7p.html
again, I agree. My strategy has always been to try to preserve the nest egg for as long as possible.
I really do not understand why one would save a nest egg for anything other than that.... and if the system is being used for saving for the dream holiday, or saving to pay off mortgages imo it flys in the face of the purpose for what it was set up for. Such things should be saved for in their own right.
However, I am becoming increasingly wary that the cost of running a SMSF may make it not viable to maintain. In such an event, I would want to be able to roll it over into my bank...not to spend, or to get more pension, but to save costs. Is that classed as a lump sum withdrawal?
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I have always been interested in super and investment, started out with sod all, expected sod all.
My nest egg has been grafted over a lifetime of work, and I do take exception, to people demeaning it.
However, when the balances that people have in super are published, it becomes obvious RBL's need to be re introduced.
As Syd has been saying.
My nest egg has been grafted over a lifetime of work, and I do take exception, to people demeaning it.
However, when the balances that people have in super are published, it becomes obvious RBL's need to be re introduced.
As Syd has been saying.
There is a saying more than 2000 years old
"....Poverty wants much; but avarice, everything..." (Publilius Syrus)
SP, the fallout of having lost so much in 2008 is that it has turned me from just a little worker with little idea about what was going on, to someone who now has her eyes wide open and sees injustice everywhere.
If more ordinary people understood, for instance, the stats re super concessions, I think there WILL be changes.
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I agree, but the fundamental reason for super, was for workers to have some of their wages put away, for an improved retirement.
The issue now revolves around the few rich people that rort the system, oh sorry you can't say rort anymore.
It would be much easier, to just address the limits, rather than how much it earns.
The problem with Labors idea is, it is somewhat like the ill conceived mining tax, one good year, does not a fortune make.
...which is pretty much what is in the AFR today...
http://www.afr.com/personal-finance...rt-for-pension-and-tax-reform-20150514-gh19lz
''....Association of Financial Advisers chief executive Brad Fox criticised the government for shying away from tackling the vexed issue of how to better target tax concessions amid the challenges of an ageing population and a maturing superannuation system.
"While a core concern of ours is the need to have stability and consistency in the rules governing superannuation to encourage people to contribute voluntarily, it is obvious that the current tax concessions are something that future governments will eventually have to address," Mr Fox said.
"It would have been wiser to wait and see what the tax came up with before limiting its mandate."
The Self Managed Super Fund Association was hopeful the government would endorse the financial system inquiry's definition of the purpose of superannuation and revisit the idea of a holistic review of the retirement income system in the future.
"Hopefully when the government responds to the financial system inquiry later this year they will back the definition of the purpose of superannuation as outlined by David Murray. Recognising that the purpose of super should be to help people stay off the age pension, while protecting that safety net for those who need it, seems to have widespread support from both sides of politics and the industry," SMSFA senior manager technical and policy Jordan George said....''
and
http://www.investordaily.com.au/superannuation/37548-govt-refusing-to-be-honest-on-super-bowen
I’m a bit sick of reading about super rorters.
My wife & I have one of those large SMSF super balances.
However we have only ever made pretty standard contributions and have not made any non-deductable contributions where the bigger caps exist(ed)
I suspect we have made fewer contributions then most talking about rorters.
The tax paid by our SMSF supports quite a few pensions for other people.
Yes our balance is larger because of the 15% earnings rate BUT the overall tax paid by our SMSF is greater under the 15% rate then if marginal rates had applied.
Since when did following the rules and making a good return make you a rorter?
I agree there should be a cap – but in fairness the money above the cap should be accessible irrespective of age. I would gladly “stop rorting” the system and remove money above the cap back into the non-super environment if I was allowed.
But what should I do within the rules to stop rorting the system? strive for lower returns?
Maybe not all those high balances are rorters, maybe some of them would like to see change as well.
Yours sincerely
Dirty rotten rorter.
My wife & I have one of those large SMSF super balances.
However we have only ever made pretty standard contributions and have not made any non-deductable contributions where the bigger caps exist(ed)
I suspect we have made fewer contributions then most talking about rorters.
The tax paid by our SMSF supports quite a few pensions for other people.
Yes our balance is larger because of the 15% earnings rate BUT the overall tax paid by our SMSF is greater under the 15% rate then if marginal rates had applied.
Since when did following the rules and making a good return make you a rorter?
I agree there should be a cap – but in fairness the money above the cap should be accessible irrespective of age. I would gladly “stop rorting” the system and remove money above the cap back into the non-super environment if I was allowed.
But what should I do within the rules to stop rorting the system? strive for lower returns?
Maybe not all those high balances are rorters, maybe some of them would like to see change as well.
Yours sincerely
Dirty rotten rorter.
Craft, I believe most "fair" minded people agree that something needs to be done. The snowball is becoming too large a burden.
http://www.alp.org.au/fairer_super_plan
''...A recent report by the Association of Superannuation Funds of Australia (ASFA) highlighted the unsustainable nature of the existing tax concessions, noting that there are 475 people with super balances in excess of $10 million who are earning tax-free income of about $1.5m each year. In addition, more than 24,000 self-managed super funds with account balances of more than $2m have annual tax-free earnings in the hundreds of thousands...''
I think it amazing that nothing is being done when it seems so obvious that the cap needs to be changed. And there should be a limit to the amount of earnings that come out of super tax free. I agree with you that if the cap is changed, one should have the choice as to be able to access the excess funds and move them into a "non-super" enviroment or face changed conditions. But I think there will be a lot of chatter before common sense prevails.
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To think we got here because Howard decided to remove RBLs that affected only 2.4% of super accounts.
How much harm has been done to the system? How much tinkering since to try and stop the revenue drain in ways that wont get too many voters off side?
An RBL, with no limits to annual after tax contributions, would be the simplest way forward. It still allows people to get to a decent balance, but stops the clear tax minimisation that's going on. Yes it might not be that many people, but the $$$ are pretty serious, the tax leakage quite large too.
Hockey can't even bring himself to talk about the super and pension systems and how they can be integrated to have a holistic view of retirement income.
When even the industry itself admits there's a problem, and the Govt still isn't willing to talk about the problem, well how does anything get fixed?
How much harm has been done to the system? How much tinkering since to try and stop the revenue drain in ways that wont get too many voters off side?
An RBL, with no limits to annual after tax contributions, would be the simplest way forward. It still allows people to get to a decent balance, but stops the clear tax minimisation that's going on. Yes it might not be that many people, but the $$$ are pretty serious, the tax leakage quite large too.
Hockey can't even bring himself to talk about the super and pension systems and how they can be integrated to have a holistic view of retirement income.
When even the industry itself admits there's a problem, and the Govt still isn't willing to talk about the problem, well how does anything get fixed?
That's an interesting comment.
I understand you want:
a) unlimited contributions (providing they are after tax)
b) Reasonable Benefit Limits (RBLs) reinstated
If they actually did this you would find that the tax burden would be even higher.
Yes I agree, you would be taxing people higher if they take money out over a certain limit.
RBLs never dictated that you had to take the money out of super. There is nothing saying you ever have to take out more than you need (if any at all).
The problem is you suggest that can allow a lot more money into the system due to point A, which in my experience would far exceed the tax revenue gained from point B. There are a lot of people with a lot of money that is stuck outside super due to the caps.
At any point you take away the contributions limits it makes it even easier to get money into the system and use it as a tax shield.
I think we should be very careful in suggesting that politicians do not understand the consequences of their actions, or criticise them for not taking action, when perhaps some of us don't understand the issue as well as we let on.
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i should be clear I meant that if say you have an RBL of say $1.5M then let people get there how fast or slow as they like. make it easier for couples to combine at the same single / couple pension ratio. Maybe it would be easier to have couples super accounts?
keep the current limits on concessional contributions, but let people put in big after tax lump sums if they can when they can, as long as they don't go over the RBL.
It worked fairly well before. There was no incentive to go over the RBL, and it had a built in incentive to take a pension rather than lump sum as the pension RBL was twice the lump sum RBL.
The RBL back in 2007 was around the 1.2M mark for the pension RBL. Factor in inflation and that's close to $1.5M in todays dollars.
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That's my understanding. The higher RBL for pensions than lump sums was designed to stop people taking large lump sums tax free and encourage them to take it as a pension over their lifetime.
It's all a bit before my time, so I might be totally wrong. I left Australia right after uni and didn't get back until 2010.
Looks like that is right..
http://en.wikipedia.org/wiki/Superannuation_in_Australia#Reasonable_benefit_limits
but I agree with Syd in what he is saying...
there should be a RBL and there should be a RCL (Reasonable Contributions Limit)
bit like the new $20,000 tax deductions, there should be a fence around four sides, not three.
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people need to be able to save a decent amount in super, but at the same time the drain on the budget also needs to be contained.
30-35k a year in concessional contributions is reasonable as few would be able to take advantage of that. Allowing any amount up of non concessional contributions up to the RBL would then encourage people to increase the amount they have within the low tax super system.
get that sorted and then the debate can move on to if we can afford tax free super pensions, but if you limited the ability to use super as a tax shelter then ;possibly tax free super may make sense.
Some consideration does need to be given to gen x and y as they are the ones who have to try and support both the old aged pension that relied on a much higher tax payer to pensioner ratio than we have or will have, while also trying to save enough before the current pension system collapses.
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Am I missing something? I agree on the general principle but some of us do not have a steady income: good years /bad years:
my income this year is 20% from last year or so:I suggest that on a windfall/inheritance lottery gain whatever, you should be able to contribute as much as you want in any year up to a point;
so kind of same line as Syd but definitively no restrain in how fast you can reach that limit
Then what about the good year/bad year within the super fund;
you have a limit in contribution but you are a market genius and double your value in a year doubling your super balance.
It should not be an issue and so maybe the amount above the max balance( which should increase yearly by at least CPI) should be reverted back to your personal account (taxation to be discussed for that part)
And the idea of getting money out of super before you retire will not please either government or the finance lobby
who both REALLY like this captive treasure.
do i make sense?
If non Concessional then you can
http://www.superguide.com.au/how-super-works/your-guide-to-non-concessional-after-tax-contributions
If you’re under the age of 65, you can bring forward up to two years’ worth of non-concessional contributions, which means you can make up to $540,000 in super contributions in one year, representing your non-concessional (after-tax) cap over a three-year period.
Making a non-concessional contribution that is more than the annual non-concessional cap is known as a ‘bring forward’. The maximum bring forward for the 2014/2015 year is $540,000. When you contribute more than $180,000 in non-concessional contributions in one year, you automatically trigger the bring-forward rules for the following two years. Let’s look at three examples.
A $540,000 non-concessional contribution in one year: If you make a $540,000 non-concessional (after-tax) contribution to your super fund during the 2014/2015 year, say on 15 March 2015, you’re bringing forward two years of contributions for the purposes of the non-concessional contributions cap. You then cannot make another non-concessional contribution until July 2017 (that is, the 2017/2018 year).
A $360,000 non-concessional contribution in one year: If you make a $360,000 after-tax contribution during the 2014/2015 year, say on 15 March 2015, that only brings forward one year of contributions, but it means you trigger the bring-forward rules for the next two years. You then can only make another $180,000 in non-concessional contributions during the two-year period that ends on 30 June 2017.
A $210,000 non-concessional contribution in one year: If you make a $180,000 after-tax contribution during the 2014/2015 year, say on 15 March 2015, the $30,000 above the annual $180,000 cap triggers the bring-forward rules, which means over the next two years, you can make only $330,000 in non-concessional contributions.
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This article, probably explains my point better.
https://au.news.yahoo.com/thewest/wa/a/27959360/seniors-budget-pain-shock/
I think the last couple of paragraphs sum it up nicely.
Those at the sharp edge of the changes will be couples who want to retire after January 1, 2017, who own their own home and have assets outside their home totalling more than $823,000.
They stand to lose $14,467 a year in pension and the cost-of-living allowance. They face paying full freight for medication and will have their council and water rates discounts slashed.
Financial planners estimate this group will be more than $16,000 a year worse off
Add to this the fact, Labor has already said it will tax super earnings above $75,000 and I think this will cost Australia more than removing negative gearing.
Super funds will be choking on their weeties soon.IMO
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