The Future of Superannuation?

One of the newsletter's I subscribe to is a useful canary.

http://www.moneymorning.com.au/

I was somewhat alarmed reading this in today's mail:


As a refresher, we pointed out that two jumped-up boffins from the University of New South Wales had presented a submission to Emperor Ken Henry's tax review panel recommending that a "compulsory" government provided annuity was the most "efficient" way to provide for retirement.

It would mean that the hundreds of thousands of dollars, or even millions of dollars that you've accumulated in your superannuation fund would be compulsorily acquired by the government on your retirement and in return you would get an Aged Pension MkII.

The worst thing about it is that it was a commissioned submission. In other words Emperor Henry selected the two profs to come up with this report. So we can safely assume it's in line with what the Panel has in mind.

Supports what I've feared for a while and considering a number of people here have self-managed super funds in property, what is your perspective on this? Is a stand alone rental portfolio a better basket for the eggs than super funds?
 
I can't see that ever gaining support.

The Government can't even do away with lump sum withdrawals. Originally super had to be taken as a pension, but once lump sums were introduced there has been a huge outcry every time a suggestion is made to curtail them.
Marg
 
I am 34, and do not expect to have useful superannuation when I retire. At the moment, it is very popular to encourage people to save for their retirement, but once the baby boomers get squared away I suspect the rest of us who actually have some assets and income will suddenly get focus as a group of 'the rich' who should be taxed. And our superannuation will be a very obvious target.

I contribute the minimum to super, and figure if there's any thing in there when I retire, great. If not, doesn't matter. Now, I wonder what age I'll be when they let me access my super...?
 
One of the newsletter's I subscribe to is a useful canary.

http://www.moneymorning.com.au/

I was somewhat alarmed reading this in today's mail:




Supports what I've feared for a while and considering a number of people here have self-managed super funds in property, what is your perspective on this? Is a stand alone rental portfolio a better basket for the eggs than super funds?

First rule of investing is; be in control.

With super; you never are.

That's why I pay it scant respect and attention, and commit absolute minimum funds to it.

Some do commit a lot; but they do it because they;
a) have no other investing knowledge
b) do it to minimise tax.

In both cases, they are in it for the wrong reasons.

I can do far better off my own back than it (super) can, and I'm not that smart.
 
my super's done allirght for me, better than I reckon I could have done with the minimal contributions I've put in !
 
Some do commit a lot; but they do it because they;
a) have no other investing knowledge
b) do it to minimise tax.

In both cases, they are in it for the wrong reasons.

I can do far better off my own back than it (super) can, and I'm not that smart.

Bayview

There is also option c: Everyone's circumstances are different.
I contribute $2K per month but I've only done it since July and I did it because I wanted to minimise tax and to increase my cash buffer in super.

Circumstances change though and now that interest rates are going up, I'll be negative gearing again so I'll have to reduce my super contributions.

For me early retirement is a moving target but I'm doing my best to get closer...:D
 
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Supports what I've feared for a while and considering a number of people here have self-managed super funds in property, what is your perspective on this? Is a stand alone rental portfolio a better basket for the eggs than super funds?

Julie

I'm not worried, I don't believe that governments will mess up with super too much. IMO we need to have both stand alone and SMSF properties.

There are benefits with both so people need to look at their circumstances and to consider where they want to be in 10 or 20 years and then draw a plan on how to get there.

IMO Shares should also be part of this plan
 
One of the newsletter's I subscribe to is a useful canary.

http://www.moneymorning.com.au/

I was somewhat alarmed reading this in today's mail:




Supports what I've feared for a while and considering a number of people here have self-managed super funds in property, what is your perspective on this? Is a stand alone rental portfolio a better basket for the eggs than super funds?

Ridiculous scare tactics. The more in super, the better for the government. The notion that they will "nationalise" our personal savings is absurd.

If you held that as a possibility you would no sooner invest in a residential property, for surely they could take that from you as well.:rolleyes:
 
I think it is very hard to compare super schemes. They vary greatly and their benefits are significantly affected by your current age. Ie. People my age (<40 yrs old) may have to work until 70+ before being able to access benefits where as someone that is >55 now, would see super as a tax effective vehicle as they can access it very soon, at a known age point.

Additionally, public versus private sector super schemes can vary quite significantly from each other and the benefits are very dissimilar.

We only contribute the bare minimum, because like many ppl our age, we see super rules changing more times than we care to imagine prior to reaching retirement age. And we doubt the changes will be in our favour.... :(
 
If you held that as a possibility you would no sooner invest in a residential property, for surely they could take that from you as well.:rolleyes:

lol if it came to them compulsorily acquiring Super funds/assets (including those in SMSFs) the answer would have to be: SMSF + Gold Bars + Boating Accident where they are lost :D
 
I only salary sacrifice into super because my employer matches it up to 5%, so I look at it as being an extra 5% pay every year. I wouldn't do it otherwise and I certainly don't intend to wait until I can access my super before I retire.
 
We only contribute the bare minimum, because like many ppl our age, we see super rules changing more times than we care to imagine prior to reaching retirement age. And we doubt the changes will be in our favour.... :(

I'm with you on this one. And the FP that work gets in wonders why I can't be enthusiastic about putting money away that I may be able to access in 30+ years. If I'd put into super instead of what I've put into IPs, I'd be miles behind.
 
I'm with you on this one. And the FP that work gets in wonders why I can't be enthusiastic about putting money away that I may be able to access in 30+ years. If I'd put into super instead of what I've put into IPs, I'd be miles behind.

This is because FP's and accountants often see the tax benefits, and can't quantify the benefit of flexibility.

I seriously believe the age at which super can be access will gradually be increased over the next several decades. And I for one have no intention of working full time past about 45 years old.
 
This is because FP's and accountants often see the tax benefits, and can't quantify the benefit of flexibility.

I seriously believe the age at which super can be access will gradually be increased over the next several decades. And I for one have no intention of working full time past about 45 years old.

Thats my plan also.
I give little care for super.... but for fun i will one day probably set up a SMSF and buy a property, just because i can and i want to.
 
compulsory acquisiton of super would be called "communism" unless you had your own account payable directly to you.

however, too many holes to plug in that boat.

if you have $10mil, and your neighbour has $1mil, do you get 10x as much in "paydowns"...?
 
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The trouble with superannuation is that it is only really good for high income earners. Unless you are into the 40% (some would argue 45%) tax bracket the tax advantages aren't that great.

Its also a reasonable deal if you are over the age of 55 (maybe 50).

Back to my first point. Super is best for Rich people, who being Rich don't need it if they learnt how to save. Low income earners simply don't get enough accumulated for it to free them from the age pension. Online calculators tells me someone earning $50K from 25-65 gets a balance of $387K in todays dollars (assuming 7% return). Sounds like a decent pile of money, but that can get eaten up very quickly.
 
The trouble with superannuation is that it is only really good for high income earners. Unless you are into the 40% (some would argue 45%) tax bracket the tax advantages aren't that great.

Its also a reasonable deal if you are over the age of 55 (maybe 50).

Back to my first point. Super is best for Rich people, who being Rich don't need it if they learnt how to save. Low income earners simply don't get enough accumulated for it to free them from the age pension. Online calculators tells me someone earning $50K from 25-65 gets a balance of $387K in todays dollars (assuming 7% return). Sounds like a decent pile of money, but that can get eaten up very quickly.

And that $387k would probably provide you with around $370 per week IN TODAY'S DOLLARS, which won't be much in 40 years, even if inflation stays low.
 
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