Anything and Everything about Superannuation

There was a brief window where people could add basically unlimited amounts to super. I know of one person who has over $10m in super. This won't happen again.

But why should the government care?

Superannuation left to non-dependents is taxed at around 15%. The definition of dependents is very narrow, so the govt of the day gets a good share. Unless, of course, you have a reliable crystal ball and know just when to liquidate your super.
Marg

 

It's called a few signed and undated cheques in the SMSF waiting for that special time

 

I have heard there are a few SMSFs with over $40 million in them!

 

You could well be correct @Marg4000 but I really wouldn't know in this particular case. My suspicions are he has that aspect covered but it's none of my business obviously. All I really know about him is his first qualification was as a carpenter and then decided to change career to law. Quite a smart person and deep thinker although you wouldn't know it at a first meeting.

And, yes, as you and @Terry_w have said, there are some who have really taken advantage of the legislation as it was. While some may be outraged at the "generosity", assuming it was all lawful, I have no particular beef with those who abide by legislation in place at the time. It's what we all tend to do in our own way.

 

Well, that's gonna last them very long in retirement.

 

It is worth remembering that, for those now retired on possibly very generous superannuation balances, superannuation was not available to everyone for most of their working lives.

I was not eligible to contribute to superannuation till I was 39 and my government job changed to permanent part time. Prior to that I was casual and did not qualify. Most women weren't eligible outside government jobs. There were no rollover provisions, when hubby left a job for another his superannuation was cashed out - his contributions only, there were no employer contributions for him.

In recognition of this, early leglislated contribution amounts were designed to allow these people to "catch up" to the extent that they could afford to do so. These contribution amounts have been reduced over the years as universal superannuation was made available to everyone.
Marg

 

@Marg - thanks for the history on the generosity of contributions & need for change.

Just a bit ticked that I hadn't contributed more over the last couple of years before they tightened the limits.

 

Yes, there are definitely circumstances where a number of people were adversely impacted in comparison.

While it was available both my late wife and I took advantage of the very generous deductible contribution limits of $100k per year as well as the after tax contribution arrangements but no, we didn't do the $1M thing which the Howard Government permitted. They were crazy times.

 

Compulsory super (the superannuation guarantee) was introduced in 1992 , requiring all employers to make mandatory contributions for their employees

I along with many here wouldn't have had super prior to that point (or later if self employed)

 

How ignoring my super for 19 years may cost me $400,000

Small shortfalls in performance can have a big impact over the longer term, thanks to the power of compound interest.

 

Superannuation system could be retired, Productivity Commission suggests

THE current superannuation system could itself be retired after a critical report today condemning it as outdated and harming the saving efforts of young workers.

“Bamboozled” savers are paying for accounts they didn’t intend to have, and for “zombie” insurance policies that do little more than soak up savings.

One concern is that our money is not always producing the retirement savings we deserve, says the detailed findings released today by the independent Productivity Commission.

The commission recommends a panel of experts select top performing funds to guide savers – a “best in show” range of options.

“Australia’s $2.6 trillion super system has become an unlucky lottery for many Australian workers and their families,” said commission deputy chair Karen Chester on release of the draft report Superannuation: Assessing Efficiency and Competitiveness.

“The system is working well for many members, but not for all.”

And she said: “We have had compulsory super for nearly 30 years, but its architecture is outdated.”

Ms Chester said there were two structural flaws in the system — unintended multiple accounts, and entrenched under-performance.

Cont..........

 

Recommendation ; panel selects the best performing funds! lololololol ok.

This is gold ;

“Savers should get access to a “best in show” list of top performing funds and be able to chose one they believe would be best for them.

The funds would be chosen by an independent panel of experts, and fund members should be able to switch from default funds if they want to move to a more profitable scheme”

Ha! I don’t even.....

 

I thought it was April Fool’s day but then realised we’re in May.

 

Just another example of financial ignorance by many (is it the majority, minority, one group of workers???).

I hold two funds, one as a long term industry fund which has provided a negative return twice in 30 odd years IIRC. The other is a low cost fund which has comparable returns but is easier for my employer to make contributions (others have the same fund).

I control neither fund but can adjust the strategy or jump into a more hands on role should I desire. I don't have the time to set up, manage and provide stewardship to a SMSF. I view the fund manager as an outsourced task (though more educated than your cleaner or Foodora service, I hope ). I keep an eye on costs, sundry fees, insurance, product/investment mix and returns.

The issues raised by the report highlight that 'set and forget' is more like 'forget and be damned'. It requires some management on the investor's part to monitor and guide their own strategy to ensure that they aren't spreading their seed too widely to benefit fund managers and insurers in preference to consolidation to minimise leakage and erosion of capital .

​

 

$10m to $50m are limited in numbers and ATO only report $10M as a separate group. Impossible to even determine how many funds and scale beyond that. Rare. They mostly track back to several issues:

1. Extreme CGT events. eg Someone who bought Microsoft day one and held it. Many then got trapped into frozen funds (exceeded RBLs) until the 2007 reforms removed that.
2. The holiday period before the start of 2007 reforms. Open slather abuse IMO. Any multi millionaire who didnt max their super was crazy.
3. CGT rollover exemptions
4. Some less than reputable schemes. ...I reckon there are members who dont exist with large balances. How would anyone know - Its never been regulated. Fraud involving fake identity perfecty suits SMSFs. All you need is a TFN and ATO identity..
5. Non-resident and non-complying funds schemes

Of course the 2017 $1.6m cap is now their new problem. They face far higher tax burdens but I would argue they see 15% tax as a gift.

 

I wonder how many moved funds into Super in 2007 only to get smacked by the GFC and regretted it?

 

May be of interest. I haven't read it as yet

Super(annuation)Freak

There appears to be some posts about funds investing in ETFs in Super(annuation)Freak: 2013

The posts appear to talk about Bendigo SmartStart Super – An Easy Investment Option which PC members haven't talked about (from my vague memory?)?

 

Bit dated. The author stopped posting after accepting an offer to work for a Superannuation provider.

 

What are the best industry super funds?

 

Certainly, I agree. Posted as if it gets someone thinking or starts other disucssion then it increases one's knowledge.