Government told to introduce pooled thresholds for super

Government told to introduce pooled thresholds for super

“The changes have gone too far and now there are no incentives left in the system to attract taxpayers to save above the compulsory contribution rate,” the submission stated.

“Some of these policies include the reduced deductible contribution cap of $25,000 per year, the $1.6 million pension cap and the 30 per cent contribution tax rate applicable to individuals deriving more than $250,000 per annum.

“We are concerned that the outcome of these significant policy changes, which collectively eliminate most of the voluntary savings incentives from the super system, will be to discourage retirement savings from those taxpayers with the capacity to save. Over time, we believe that this will create a new class of taxpayer with insufficient savings to self-fund their retirement who will qualify for, and need to rely on, the age pension.”

The submission said that the government should therefore consider reintroducing voluntary savings incentives back into the system as well as encouraging middle-income earners to use those incentives to self-fund their retirement.

One of the policies it could implement, the submission said, is increasing the deductible contribution cap from $25,000 to $50,000.

The submission also recommended introducing pooled thresholds and limits for super within families.

For example, this could mean allowing couples to pool their pension cap and contribution limit and use the combined threshold or limit in any way they chose.

 

I am all for multi-million dollar upper limits on super but more concessions for growing your super in the early years are needed. The above, if it ever comes to pass, will be quite advantageous.

 

The complete lack of clarity in the future legislation of superannuation is the most frustrating aspect. The government is asking us to leave our chickens with the fox for safe keeping, at least foxes stop eating when they are full.

There's a valid argument to ditch super completely - a bird in the hand is worth more than two in the bush. They dangle the tax carrot and subsequently say it's too generous.

 

I do wonder if some are slowly becoming disenchanted with superannuation.

One of mine is adamant they will not contribute more than the SG charge and invests their funds outside of super despite the tax concessions.

Of course being a sample of one there is nothing to otherwise support my statement. I were starting out again I'd have to give serious consideration to it. However, if I were in my twenties given all the noise surrounding superannuation it'd be a task and a half to separate myself from it and assess the changing and "warped" history of changes to super.

 

Unfortunately, Super is a low hanging fruit which is easily attacked by successive governments however they are very slow to react to changing conditions. It is far easier to change the super scheme for millions of working Strayians than for the public servants, so guess what happens?

The government 'old super scheme' was around for a long time and totally unfunded (great scheme) but someone forgot that they needed to contribute to it to make the thing work (a government backed ponzi scheme). They eventually made some changes, closed it to new members, created the Future Fund etc.

There is even less incentive for the fat cats to change the Politician Super Scheme and to bring the release conditions to the same requirements that we mere mortals must endure.

 

Hehe. Is there a certain attitude there?

I've nothing against those public servants who were under the old schemes. It was part of their employment arrangements and was what it was. Many probably commenced with the APS without much thought of the end retirement benefits. Fortnightly steady income and that was it.

If anything it's the ones who I have encountered who appear to gloat which gets right up my nose - careful SK or you'll be seen to be envious!!

When I have discussed it with a few on rare occasions some do appreciate the generosity of the scheme but others don't especially the old CSS. Those who do acknowledge it was essentially paying a set amount into the scheme and on leaving it receiving all their contributions plus earnings back and given a pension for zilch.

Others had no idea and/or couldn't care less.

I'd hate to think how much it would cost if you had to pay for a CPI-indexed life time annuity with a 2/3 reversionary benefit ignoring a 10% tax rebate if you're over 60. Probably a couple of million for a $60k pension but I've never done the numbers on it.

 

As someone who is living more than comfortably off our superannuation income, I can say that contributing as much as we could, when we could, is the best thing we ever did.

And no, we did not benefit from any generous scheme. only our contributions plus employer contributions when legislated.

I followed the example of my dad, who contributed to the max to his super (the very generous old Commonwealth Govt scheme) which enabled my parents to travel the world extensively in their retirement.

Of course we kept (and still keep) a close eye on it, attended seminars and made sure we fully understood the leglislation at the time. Sure, “rules” have been tweaked from time to time, but knowledge is power.

Like all options that rely on compounding, the greatest benefit is seen in the last few years.
Marg

 

Get rid of a a low tax environment with a range of concessions to play with? Super when used right can be a great wealth creation vehicle. Sure, the rules can be frustrating at times but that is no different to constantly changing investment/taxation rules outside of super.

 

A person who has a high super balance will always be financially advantaged over those who do not. The effect of compounding matches well with a strategy of continued growth and addition to super.

I'm endlessly being told by people that property is their super. Property can make a good investment and when combined with super makes a strong strategy better. Property should never be an alternative to super. An addition, yes. Super is the milk, Property should be the cream on top. In many instances property isnt wealth. We all hear stories of portfolios worth $2m, $3m etc But the person has matching debts. So the portfolio is worth $0. The cashflow to sustain a portfolio may even be a burden - Preventing additions to super. A mouse in a wheel running fast but going nowhere.

I see a large number of self employed people who dont pursue super who then retire with almost nothing. If they lack the discipline to contribute they typically lack discipline with property too. They often use excuses about how super rules keep changes, complexity, rip-off fees etc. But come retirement is the test.

 

Join an industry fund, pay yourself & sgc, don't worry about the rules just the limits.

Nothing hard about that.