Super Windfall

[redwing]

According to FINDMYSUPER

The Federal Government is set to claim a $10 billion windfall in lost or inactive super with funds to be seized that have been inactive for 5 years

Government will start claiming Superannuation accounts that remain inactive from October.

"Find My Super Launches new web site to consolidate inactive accounts into clients current fund".

 

[joeExpat]

This is misleading - I think the account owner needs to be uncontactable, i.e. acount is lost, not inactive. My 100k+ super has been inactive for over 8 years but they still send statements every year.
Perhaps this website is just trying to drum up some business.

 

[RumpledElf]

Pah, my old work super is inactive. Its a federal government one and I'm strictly forbidden from adding to it or rolling it out, and I'd be really peeved if the government came and took it off me considering they SET those restrictive conditions.

 

[redwing]

I'm sure many others have lost track of thier superannuation i.e. changed addresses without notifying thier super funds (mail returned) have limited funds in those accounts and not bothered or held a multitude of jobs without bothering to track the super, maybe even some dodgy names and TFN's. Apparently an account is considered lost if its been inactive for two years or if mail sent out by the super fund is twice returned unanswered

Australian Superannuation is a $1.3 Trillion dollar industry, I had heard that the management fees for Australian Superannuation Funds in total is up to the tune of $14.3 Billion Dollars per year (about half the cost of the $28 Million Dollar Aged pension).

I'd always wondered why the government had given the insurance companies (and banks who have taken over a large share) such a golden handshake as to manage the retirement funds of its aging population (and even charge a management and adminstration fee for bad performance).

More reforms planned apparently

Under planned reforms, which the Gillard Government is considering, a worker's tax file number would be matched to their super accounts.

This would stop Australians losing track of their nest eggs when they switch jobs. Review head Jeremy Cooper said the $13.6 billion in lost super equalled about $1000 for every person in the system and "that's money that people have actually worked for, but they're not going to retire on".

Whenever the Australian Taxation Office receives notification of a current super account, the lost balance would automatically be transferred to it. This should help to transfer some of the billions of lost super to rightful owners.

 

[RumpledElf]

Apparently an account is considered lost if its been inactive for two years or if mail sent out by the super fund is twice returned unanswered

What is 'inactive'? I have a good 30 odd years to wait until I can touch my super, in which time it will probably grow to a decent figure (it actually went up substantially during all that GFC cruft). You're not telling me that because I can't do a single thing with it in that time that it becomes 'lost'? What's the point of having super then when some jobs have their own super funds, so 2 years after the end of the job all that money you contributed is just ... gone?

Also given how I'm not allowed to touch this super it wouldn't surprise me if it is specifically exempt from this legislation. I was really quite pissed off when they told me I wasn't allowed to add to it or roll it out, considering I started a new super fund just to roll all my stray amounts into and THAT one sent me a letter back saying "No." It also bounced my super co-contribution from the government one year (because I had stopped working for the government) and I had to put the returned ATO cheque into another super fund.

 

[Dazz]

Just one of hundreds of reasons why I wouldn't contribute any more to super than the absolute minimum.

Every 'adviser' who is creaming their little bit of that 14.3 BILLION in fees forever tells everyone that it is simply THE best environment for you to put your money into.

I am in disagreement with them if they say that.

I'd rather have control over my funds and be able to do with it as I see fit, not be told I can "access it" in 35 years.....and then when that eventually turns up, they'll have shifted the goalposts around a few more years out. Of course, the definition of "access it" according to the solicitors setting the rules would be totally different to the average Joe who would assume they could just have the money. "Access it" means nothing of the sort. More like a dribble to replace a miserly part pension for the next 15 years before you pop your clogs. Then your estate will get taxed to death and you get nothing and your beneficiaries get bugger all as well.

Ah - perfect if you have your Govt revenue hat on.

I know there is a very funny cartoon in one of the Noel Whittaker books where a newspaper delivery man is throwing the morning paper, along with changes to the superannuation legislation. He believed they were coming so thick and so fast, the people keeping up with it all - read very few - needed to read as much as the newspaper every day in new rules. Any average Joe had no chance whatsoever.

That was back in the early 90's, so it has probably changed 4 or 5 times since then, especially the fact of people being able to gear their portfolio's now, a change they made maybe 2 years ago now.

Who knows what changes will occur in the next 35 years ?? I know I couldn't invest in a regime that was that uncertain.

 

[our obsession]

Just one of hundreds of reasons why I wouldn't contribute any more to super than the absolute minimum.

Every 'adviser' who is creaming their little bit of that 14.3 BILLION in fees forever tells everyone that it is simply THE best environment for you to put your money into.

I am in disagreement with them if they say that.

I'd rather have control over my funds and be able to do with it as I see fit, not be told I can "access it" in 35 years.....and then when that eventually turns up, they'll have shifted the goalposts around a few more years out.

Yep, knowing what I know now. Idle money sitting there. I actually spoke them about letting me work magic with it, they wouldn't give it to me.

 

[Pa1nter]

What's the point of having super then when some jobs have their own super funds, so 2 years after the end of the job all that money you contributed is just ... gone?
.

You mean your "employer" contributed

 

[RumpledElf]

Well considering they contributed my entire salary and then took a chunk out of that salary to put into super, I guess they contributed it, yes. But if it is just going to disappear after you leave the job, I'd rather have the money as salary and no super. Could just put it in the bank that way.

 

[Corey Batt]

http://www.ato.gov.au/super/content.asp?doc=/content/33301.htm

Find super, roll it into one account. Keep up to date with that singular account.

....

 

[RumpledElf]

CJ - I did that. I opened a new account, rolled all my little ones into it. This one super - my largest one - sent me back a letter saying "sod off, you're not allowed to do that". I did ring them and they confirmed it. So there goes that idea. You can't even add to this super unless you are in federal public service.

 

[Corey Batt]

You should be able to pull your super from the APS super fund and put into a non-exclusive fund however, iirc. Otherwise rolling over all other funds into one account, APS fund in another. Make sure you keep those two funds up to date on your current contact details. Shouldn't have a problem.

No one really needs to worry about this windfall, people really need to place greater importance on managing their super funds, after all for most Australians it is their only retirement savings vehicle.

 

[redwing]

Burning cars, tear gas in France strikes

French youths have battled riot police, truckers have blocked roads and service stations have run dry as protests escalate against President Nicolas Sarkozy's plan to raise the retirement age from 60 to 62.

In June, the French government revealed plans to make a sweeping overhaul to the countries pension system.

Under the plans French workers would have to pay contributions for a longer period and new taxes will be slapped on high-income earners and on capital gains to plug a gaping hole in pensions funding, labour minister Eric Woerth said.

"It is imperative that we salvage our pensions system," Mr Woerth said as he rolled out the proposed changes, the most controversial of which is pushing back retirement from age 60 to 62 by 2018.

"Working longer is inevitable. There is no magical solution."

 

[redwing]

Lost superannuation windfall as $13 billion sits idle

MORE than $13 billion in inactive or lost superannuation accounts is about to be taken by the Government unless the owners claim them.

Laws introduced last year by the Federal Government mean that, from this month, funds in inactive super accounts can be transferred into consolidated revenue. It is estimated that the government will fill its coffers with about $10 billion from these accounts in the next five years.

FindMySuper managing director Russell Medcraft said there were now more than 34 million superannuation accounts, held by just 10.5 million working Australians.

"This means there are now more than three accounts per person," Mr Medcraft said.

He said people were generally too lazy to chase accounts accumulated over the years.

FIDO: Find your lost super here

 

[redwing]

Gap Year in Retirement ?

Oldies going for broke before retirement

RETIREES with modest superannuation payouts are spending their cash on caravans, holidays and home renovations before surrendering to the mercy of the age pension.
With average payouts of just $24,000 - too little on which to survive long-term retirement - almost two thirds are choosing to enjoy themselves and take a "gap year".

A survey commissioned by the Industry Super Network of retirees from five leading superannuation funds found 50 per cent of over 55s had emptied their super accounts.

About one quarter said they had debts of more than 25 per cent of retirement savings.

"What we are seeing is that after working to build this country for 40 years, many couples want to take a well-earned trip while they still have their health, which often becomes a big part of their planning for retirement," ISN chief executive David Whiteley said.

"Our super system should give people the opportunity to have dignity in retirement and reward themselves with a trip around Australia."

However the research found just one in 10 households with less than $100,000 in retirement savings invested any money in pension products that would provide an ongoing income stream in retirement.

"The reality is that compulsory super [deductions] need to increase from 9 per cent to 12 per cent if we are going to deliver the expectations that Australians have of their retirement," Mr Whiteley said.

Cont....

 

[redwing]

I received this the other day..bears contemplation also with regards to super and retirement

SUPER – HOPE v. REALITY

As I have said before, to encourage retirement savings, superannuation has become a vehicle to save tax as it will always struggle with the goal of wealth creation.

The basic premise of wealth creation through super is: in order for you to have the necessary funds that you will need at retirement, you must begin putting some money into your super every month, and you'll need to continue putting a monthly amount into your investment vehicles for as long as you can, up and until you retire.

The story continues to make an assumption like this: over the years you will earn an average annual rate of return of 8% compound on your investments. So if you saved $800 each month for 360 months (30 years), and you were to earn an average annual rate of return of 8%, you would be rewarded for your discipline and financial acumen with an amount approximating $1,087,519

However, assume that the real economic rate of growth i.e. after inflation is a realistic 2% pa, not 8%.

At a 2% average real-world return on your investment, after 30 years, you would end up with only $389,454 of today’s purchasing power.

If you plan to draw $60,000 pa (in today’s money) this $389,454 approximates only six or seven years of retirement income.

Now I know you haven’t been earning $105,000 pa since age 21 – which is what you need for the 9% super guaranteed levy to generate that $800 per month savings – and that super (after fees) is unlikely to generate long term earnings of 8%, and also that incomes increase over time, so your monthly savings could increase. So it’s a false sale.

However my purpose here is to have you focus on the question “what really will super generate for my retirement?” and encourage you to do the maths for yourself.

 

[redwing]

Money held in super that has not received an additional amount for the last 12 months or more and has a value of $2000 or less will by transferred from the holding fund to the ATO by May 31;Previously this was limited to accounts of $200.

There are about 3.4 million lost super accounts worth $17 billion.

“By having these lost accounts with low balances transferred to the ATO, it will be easier for Australians to find their savings and roll their money into one fund of their choice,” the ATO’s deputy commissioner for superannuation Alison Lendon said in a statement.

Legislative changes will also now apparently see that Bank accounts inactive for 3 years or more (previously 7) will transfer to ASIC?

 

[redwing]

I read recently that Opposition leader Bill Shorten has announced that I

F labour win the next election they will introduce a new tax plan that would see retirees who earn more than $75,000 charged 15% tax annually on their super and working age adults who earn more than $250,000 targeted.

So anyone retiring with Super of $1.5 M earning 5% p/a

Would make all those who put personal contributions, or sold assets years ago to put it all into Super happy

 

[oracle]

I read recently that Opposition leader Bill Shorten has announced that I

So anyone retiring with Super of $1.5 M earning 5% p/a

Would make all those who put personal contributions, or sold assets years ago to put it all into Super happy

I did try to get some clarification on this in another thread here

Do you know if that $75K is per person or family? For eg. in SMSF with husband and wife do they pay tax at $75K income or is the threshold $150K?

Would be interesting to know the mechanism on how the $75K threshold is determined.

Cheers,
Oracle.

 

[redwing]

Constant changes to super rules leave those saving for retirement reeling

Whatever happens to superannuation and government age pension rules in the federal budget and beyond, there will be many who will feel they have been duped into over-investing in super or choosing a particular retirement investment arrangement because of a government change.

Perhaps they were lured by the thrill of paying no tax on super pensions offered by the Howard government in 2007, or being entitled to a part government age pension and a government health benefits concession card under a more concessional Centrelink assets test (also introduced in 2007). Both these measures have prompted many to make super their key retirement savings strategy over the past decade.

Many in retirement or saving for retirement feel hard done by ? whether it's the proposal by Labor to introduce a 15 per cent tax on annual investment earnings greater than $75,000 by member accounts in pension phase, or the "back to the future" idea the Coalition has accepted of rolling back the age pension assets test cut-off to the less concessional pre-2007 level.

A reader illustrates this by writing that he and his wife invested heavily in their future around 2006-07, contributing significant after-tax dollars into their self-managed fund during a window of opportunity to contribute $1 million, before this was reduced to $150,000 a year.

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