Discussion in 'Superannuation, SMSF & Personal Insurance' started by Nodrog, 22nd Mar, 2020.
Hmmm...wonder what they define as hardship.. wouldn't mind 20K over two financial years.
By the way, what is the Future Fund for?
It was created to meet the Commonwealth's unfunded liability for APS pensions, not the public at large.
To fund those poor public service retiree pensions.
You do realise these "poor" retired public servant on $50k pa is the equivalent of having $20m in capital? Pension/RBA Cash Rate.
If I heard correctly, they reckon $27bn might be withdrawn but this isn't a problem since super funds hold many times this in cash.
But ... imagine for simplicity a super fund with two members. A has $50k 100% equities, B has $50k 50/50 equities/cash, so fund holds $75k equities, $25k cash. A asks for $20k, no problem, here's a cheque. But although the fund can give it him, they no have $75k equities, $5k cash. So to make their assets balance their liabilities they do have to sell down $20k of equities which if translated to $27bn will surely knock stock prices further. Or am I missing something?
This seems to be the worst time to draw down on super, more money getting pulled from the market?
20% loss of income for casual/sole-trader is every other week. The threshold needs to be higher.
Why make the threshold higher? It's not much money and if people need it now let them have it - we are at the precipice of an economic crisis. I think the bar will be deliberately set very low. Most people will only withdraw from super if it is genuinely required. Those that waste it would have wasted it when the got access to it on retirement anyway. I'd rather see the $27B go into the economy now when its needed.
agree with this
I follow what you are saying, but I dont think it will be too much of a problem. I believe the majority of Super clients have poor financial literacy, remember, even if they read Barefoot Investor (general statement here). All those default "balanced" accounts have about 10% cash in them anyway. I cant imagine too many of the masses will have 100% in equities.
He he. My wife and I between us get close to $25K pa from our Federal Gov’t DB pensions. I always thought of this as a small amount. But as a component of the risk free part of the portfolio being Gov’t Guaranteed and indexed to inflation, when this income stream is converted to it’s capital cash value based on current interest rates we’re millionaires on that alone. Crazy when you think about it.
Geez when we look back we wish we had contributed the max 10% to PSS DB Super rather than the minimum during our relatively short time in the Public Service.
Don’t tell @Redwing but I treat the above as the equivalent of risk free allocation to indexed Gov’t Bonds.
The govt gave the future fund a whole swag of telstra shares which were later sold en masse, causing the share price of telstra to plunge. Nice one Johnny. Not if you were a telstra shareholder.
LOL. And that amount probably can cover, or the majority of, your basic costs such as rates, insurance, car rego, internet, phone plan.
I note you left out one of the major basic expenses for some being coffee.
Yes in the current environment we feel very lucky to have it compared to those retirees scared of the sharemarket and having to live off their cash savings. Given where cash / term deposits rates are now our PSS pension doesn’t seem quite so small anymore.
The FF was established two decades ago...to fund the unfunded Commonwealth pension liabilities. Full. Stop.
Is there any/much downside for a person accessing this if they have the option to? Tax free seems like you would definitely do it right?
Negative effects in the future. But if you think you can use it better now then could be worth taking it. Think that is what I will do.
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