Controversial recommendations from Grattan Institute on Superannuation

Discussion in 'Superannuation, SMSF & Personal Insurance' started by PeterT, 7th Nov, 2018.

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  1. PeterT

    PeterT Active Member

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    Here are the 8 recommendations from the recent report from the Grattan Institute "Money in retirement: More than enough". I suspect all of them will provoke vigorous discussion.


    1. The Superannuation Guarantee should remain at 9.5 per cent.
    Planned increases in the rate of compulsory superannuation contributions to 12 per cent by July 2025 should be abandoned.

    2. Commonwealth Rent Assistance should be increased by 40 per cent.
    The maximum rate of Commonwealth Rent Assistance should be increased by 40 per cent – an extra $1,410 a year for retired singles and $1,330 for couples.. This increase should also apply to Rent Assistance recipients below Age Pension age.. Commonwealth Rent Assistance should be benchmarked to rents paid by the poorest 40 per cent of renters, rather than to the consumer price index.

    3. The Age Pension assets test taper rate should be reduced to $2.25 each fortnight for every $1,000 in assets.
    The Age Pension should be withdrawn at a rate of $2.25 per fortnight for each $1,000 of assets above the “asset free” area, rather than the current rate of $3 per fortnight.

    4. Superannuation tax breaks should be reformed further.
    As recommended in our 2015 report, Super Tax Targeting:

    – Annual super contributions from pre-tax income should be limited to $11,000 a year.

    – Lifetime contributions from post-tax income should be limited to $250,000, or an annual cap on post-tax contributions of $50,000 a year.

    – Earnings in retirement – currently untaxed for balances below $1.6 million – should be taxed at 15 per cent, the same as superannuation earnings before retirement.

    5. Age-based tax breaks should be reformed.
    As recommended in our 2016 report, Age of Entitlement:

    – The Seniors and Pensioners Tax Offset should be wound back so that it is available only to pensioners, and so that those who do not qualify for a full Age Pension pay some income tax.

    – The Medicare levy should also be imposed on seniors at the level where they are liable to pay some income tax.

    6. The value of the home should be included in means tests for the Age Pension and aged care.
    As recommended in our 2018 report, Housing affordability: reimagining the Australian Dream:

    – The Age Pension assets test should be changed to include the value of a home above some threshold – such as $500,000.

    – Correspondingly, the value of assets that do not reduce the Age Pension should be raised to the same levels that apply to non-homeowners.

    7. The Productivity Commission should investigate raising the age of access to the Age Pension and superannuation to 70 years.
    The Commonwealth Government should request the Productivity Commission to investigate the economic, social and budgetary costs and benefits of gradually increasing the age of access to the Age Pension to 70 years, including:

    – Whether there should be a new regime for easier access to the pension for people aged over 60 years whose health has been so impaired that it is difficult to work.

    – Whether reforms are needed to the early access regime to ensure people with a disability can continue to have early access to superannuation.

    8. The Commonwealth Government should ask the Productivity Commission to review the adequacy of Australians’ retirement incomes

    The Commonwealth Government should request the Productivity Commission to review the adequacy of Australians’ retirement incomes. As part of that review, the Productivity Commission should establish a new standard for retirement income adequacy and assess how well Australians of different ages and incomes will meet that standard.

    That standard should form the basis for government guidance about the adequacy of retirement savings, including on the ASIC Money Smart website. References to the ASFA comfortable retirement standard should be removed.
     
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  2. twisted strategies

    twisted strategies Well-Known Member

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    i have been listening to several different views on this

    FIRST i noted the push to raise the retirement age to 70 ( and then probably to 75 and then ??... ) that's fine for non-productive office furniture

    I WOULD LOVE TO SEE a 70 year old do half the jobs i have done at 70 ( and stay within health and safety guidelines ) ( please note i did NOT say at the same pace , that would be too much )

    next this is quite obviously an admission that the compulsory super funds has failed , NOW HOW MANY REGULATORS HELPED CAUSE THAT ??

    yes there were bad financial practices , but that was straight unrestrained human nature , if you didn't see that coming you didn't deserve a job in administration ( let alone ignore them for over 10 years ).

    for those lacking in history education .. the aged pension was a trade off instead of removing the 'temporary war-time tax on worker's income ( PAYE/PAYG etc etc )

    the aged pension is NOT a blessed gift by governments the workers paid for it with the taxes or wages and salaries
    and guess what you compulsory super is .. YEP another gouge out of your wages/salaries to supplement your pension ( because the government has over-spent ) and not a blessed gift from your employer

    and the politicians and other leeches can still see some more cash to be pilfered

    why would any sane worker embrace this super scam when the goal-posts get moved so often .
     
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  3. Rickwood

    Rickwood Member

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    You're spreading so much misinformation here, even with the content directly above!

    There is NOT a move to increase retirement age. There is a suggestion from the Grattan Institute of raising the age to access age and super pensions - you can retire whenever you like

    Superannuation is an investment vehicle, with tax incentives
     
    Last edited by a moderator: 18th Nov, 2018
  4. twisted strategies

    twisted strategies Well-Known Member

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    please tell Human Resources they don't seem to have gotten that memo


    Age Pension - Age rules - Australian Government Department of Human Services

    and Centre-link haven't rushed to tell me good news either .

    the Grattan Institute like to believe they are an influential organization , maybe not as influential as Alan Jones but not totally ignored either .

    and those 'tax incentives' are most likely eat into your aged pension anyway given enough government meddling

    Superannuation: is it worth it?

    Superannuation: is it worth it?

    superannuation is a trust structure , and look how well the trustees can behave ( watch the ongoing Royal Commission )
     
  5. Rickwood

    Rickwood Member

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    Twisted, I think you’re still missing the messages. The DHS link you provided refers to aged pension age eligibility - it has nothing to do with when you can retire. Also see point 7 in the initial post!

    The second link you provided clearly states that superannuation is an investment vehicle. We should all choose a super fund with low fees and an investment strategy that suits our risk appetite. All of this is publicly available to everyone.

    Having opposing or varying views is fine, but let’s stick to facts where possible to support our positions and assertions

    All the best
     
    Last edited by a moderator: 19th Nov, 2018
  6. twisted strategies

    twisted strategies Well-Known Member

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    having been given a disability pension INSTEAD of the requested sickness benefits ( after the medical review on eligibility ) and not yet 65 years old ( but not so far away from 65 )

    it is very hard to financially plan your retirement ( unless you are a former member of parliament )

    now i look like will get through this in reasonable shape , but what about my friends who are 10 to 20 years younger , many of them have put their body on the every bit as much as me ( in the endeavour of a earning living wage ).

    super CAN be an investment vehicle but the experience of my friends magnify the flaws found the the Royal Commission ( including some areas still to be addressed in the RC )

    so if your super 'trustee ' is somewhere you may have had your confidence in shaken ( or destroyed ) and the government is regularly fiddling with the framework

    how do you plan for your ( and family's ) latter years ??

    OR deduce a sensible outline to confront your financial advisor with when asking for advice

    now of course the previous Prime Minister did give a few hints ( invest in a fad start-up business such as OzEmail sell out a bit later ) set up a family trust in Panama investing mainly in international ETFs ....

    given his parliamentary history he ( and his wife ) should do very nicely , even if they had been penniless on leaving parliament .( assuming he never works again anywhere )

    but how about the middle-aged average citizen .. will they have continuous employment ( and good health ) until a self-chosen retirement date , will the investment choices made be correct .

    let's talk about 'low fees' ( and other 'options ' ) i finally was put into a super fund about 12 years ago ( now the law says one thing but life doesn't always follow the letter of law )

    first of all it was a COMPANY super fund , which often loaded up with company shares to protect the directors from removal , from time to time , following the US corporate model , bundled in an insurance component ( never found that opt in/ opt-out box ) got to vote for company selected board members ( some allegedly caring about the employee interests , )
    very much like voting from your preferred Russian politician

    ( the RC hasn't even whispered ' employer ' superannuation funds especially for international conglomerates )

    of course some of my buddies are still hoping ATO will find some super left from bankrupt companies they had previously worked for .

    and by the way one possibly useful change might be teaching the children ( juveniles ) how to be fiscally literate at school , and i do mean a fairly intensive course ( say embedded in basic high school maths )

    look how many naively believe your term deposit is absolutely safe ( without the Australian Government deposit guarantee in operation )
     
  7. Rickwood

    Rickwood Member

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    Seems like your dissatisfaction is with your employers, and not Superannuation per se. It’s actually quite easy to plan for your retirement given the depth and breadth of information available nowadays, and forums such as this should be places where insight can be shared.

    My wife and I fall into the “retire in 10 years category” you describe, but we’ve been lucky enough to have been able to self contribute for the last 19 (and 16 years ) years that we’ve actively had super to boost our balances. Of course I’ll still have to pay out the mortgage,but that’s a whole other discussion :)
     
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  8. twisted strategies

    twisted strategies Well-Known Member

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    compared to a buddy , i am positively complacent on this

    the mentioned buddy has had a 6 year battle with a major insurer/financial adviser ( and several supporting claim avoiders , NONE who have been minnows )

    the FOS has been stalled and deflected until it became AFCA , to be fair Comminsure looked at their part of the claim , checked the medical file and the the claimant was a licensed financial adviser ( at the time ) and paid out promptly , and the saga of course is ongoing .( and the buddy is 15 years younger than me WITH a family ... )

    while applaud your willingness to plan ahead , i deplore the government ( regulators ) inaction and the lawmakers willingness to see your savings plan as an unguarded money -box to raid at whim ( they can't even use the 'nation at war excuse ' )

    luckily i was/am financially literate and took on look at the employer super fund report ( after they finally decided to send them ) and was alarmed at what i saw and declined to .add extra funds ...

    hopefully your fund is better run than the one i was in ( before it was moved into a 'fee-fest ; default fund administered by AMP )
     
  9. Rickwood

    Rickwood Member

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    Right - back to the topic at hand
    Rec 1 - agree - the 9.5% appears to be working
    Rec 2 - strongly support this - these are the people at most risk
    Rec 3 - agree, but more to the point, stick with a policy to help people plan!
    Rec 4 - Strongly disagree. What's the intent? Raising the tax base?
    Rec 5 - Disagree. Feels like this change would be in conflict with the ability to earn xx p.f before your aged pension is impacted. Should stay as is
    Rec 6 - Strongly disagree - impacts those who live in capital cities, particularly Melbourne and Sydney, so it's hardly fair and equitable
    Rec 7 - Partially agree. I'm ok with gradually extending the age at which aged pension can be accessed. Possibly gradually raise preservation age to access Super lump sums
    Do not agree with aligning the ages
    Rec 8 - Agree
     
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