Super changes puncture hysteria balloon

images

God knows what the Australian business media loon pond will make of them, but today’s announced changes to superannuation do not add up to great deal. Property has been ignored sadly and there is some tightening of benefits for those with assets over $2 million. None of the changes are retrospective. The measures will save $900 million over the forward estimates which isn’t much in the scheme of things.  Hardly enough to justify the headlining drivel thrown at the reform for the past several weeks.

Then again, maybe the Government ran scared again. The press release certainly looks hastily thrown together. The full reforms are below:

The Gillard Government today announced reforms to improve the fairness, sustainability and efficiency of the superannuation system.

Labor is the party of superannuation – we established it, we have nurtured it and grown it, and we will protect it.

Because of past and present Labor Governments, superannuation is a unique national advantage for Australia – we have a system that is the envy of the world.

Australians are living longer and in this context the superannuation system needs to be fair and it needs to be sustainable.

The Government has already taken the historic decision to gradually increase the Superannuation Guarantee rate from 9 per cent to 12 per cent, which will provide a better standard of living in retirement for 8.4 million Australians.

It means a person aged 30 today on average full-time earnings will retire with an extra $118,000 in superannuation savings.

The Government has also increased the fairness of the concessions provided for superannuation.

  • The Low Income Superannuation Contribution benefits 3.6 million Australians on low and modest incomes, including 2.1 million women. It will benefit around 30 per cent of workers, who in 2009-10 only received around 1.2 per cent of superannuation concessions.
  • The Superannuation Concession Reduction reduces the tax concession that people with income above $300,000 receive on their contributions from 30 per cent to 15 per cent. It will only affect around 128,000 Australians in 2012-13, or 1.2 per cent of people contributing to superannuation. In 2009-10, the top 1 per cent of income earners received around 9 per cent of superannuation concessions.

The reforms we announce today will further improve the fairness of superannuation tax concessions. The changes we are making today will help restore the principles of the superannuation system that Labor created 20 years ago. The reforms will:

  • Cap the tax exemption for earnings on superannuation assets supporting income streams at $100,000, with a concessional tax rate of 15 per cent applying thereafter, and apply the same treatment to defined benefit funds;
  • Simplify the design and administration of the higher concessional contributions cap;
  • Reform the treatment of concessional contributions in excess of the annual cap;
  • Extend the normal deeming rules to superannuation account-based income streams;

Reforming the tax exemption for earnings on superannuation assets supporting income streams

The Government will better target the tax exemption for earnings on superannuation assets supporting income streams, by capping it to the first $100,000 of future earnings for each individual.

Under current arrangements, all new earnings (such as dividends and interest) on assets supporting income streams (superannuation pensions and annuities) are tax-free. This is in contrast to earnings in the accumulation phase of superannuation, which are taxed at 15 per
cent.

From 1 July 2014, earnings on assets supporting income streams will be tax free up to $100,000 a year for each individual. Earnings above $100,000 will be taxed at the same concessional rate of 15 per cent that applies to earnings in the accumulation phase.

An individual with $100,000 of tax-exempt earnings typically receives more government assistance than someone on the maximum rate of the Single Age Pension. This reform will help make the superannuation system fairer and more sustainable, and will help restore a number of the original intentions of the system.

For superannuation assets earning a rate of return of 5 per cent, this reform will only affect individuals with more than $2 million in assets supporting an income stream.

Treasury estimates that around 16,000 individuals will be affected by this measure in 2014-15, which represents around 0.4 per cent of Australia’s projected 4.1 million retirees in that year.

This reform will save around $350 million over the forward estimates period.

The changes build on the superannuation reforms announced in last year’s Budget. The Government’s Superannuation Concession Reduction for contributions by very high income earners announced in the 2012-13 Budget, together with this reform of earnings on assets supporting income streams, will improve the fairness and long-term sustainability of the superannuation system. These two measures combined will save over $10 billion over the next decade.

Applying the same treatment to defined benefit funds

The Government will ensure that members of defined benefit funds, including federal politicians, are impacted by this new reform in the same way as members of defined contribution funds (i.e. that there will be a corresponding decrease in concessions in the retirement phase).

This will be achieved by calculating the notional earnings each year for defined benefit members in receipt of a concessionally-taxed superannuation pension. These calculations will be based on actuarial calculations, and will depend both on the size of the person’s superannuation pension and their age. The amount of notional earnings each year will fall as a person grows older, in the same way that yearly earnings for people in defined contribution schemes fall over time as they draw down their capital.

Where a person’s notional yearly earnings exceed the $100,000 threshold, the amount in excess of $100,000 will be subject to tax at a rate of 15 per cent. This reform will save $6 million over the forward estimates period. Simplifying the design and administration of the higher concessional contributions cap The Government will simplify the design and administration of the proposed higher concessional contributions cap, by providing an unindexed $35,000 concessional cap to anyone who meets certain age requirements.

The Government believes that it is important to allow people who have not had the benefit of the Superannuation Guarantee for their entire working lives to have the ability to contribute more to their superannuation as their retirement age approaches. Accordingly, the Government will bring forward the start date for the new higher cap to 1 July 2013 for people aged 60 and over. Individuals aged 50 and over will be able to access the higher cap from the current planned start date of 1 July 2014. The general concessional cap is expected to reach $35,000 from 1 July 2018.

The Government has decided not to limit the new higher cap to individuals with superannuation balances below $500,000 in light of feedback from the superannuation sector that this requirement would be difficult to administer.

This reform will save $365 million over the forward estimates period.

Reforming the treatment of concessional contributions in excess of the annual cap

The Government will reform the system of excess contributions tax (ECT) that was introduced by the former government in 2007, to make it fairer and give individuals greater choice.

Under the current arrangements, concessional contributions that are in excess of the annual cap are effectively taxed at the top marginal tax rate (46.5 per cent) rather than the normal rate of 15 per cent. This outcome is achieved through the imposition of ECT. This is a severe penalty for individuals with income below the top marginal tax rate.

The Government will allow all individuals to withdraw any excess concessional contributions made from 1 July 2013 from their superannuation fund. In addition, the Government will tax excess concessional contributions at the individual’s marginal tax rate, plus an interest charge to recognise that the tax on excess contributions is collected later than normal income tax.

These rules will ensure that individuals are taxed on excess concessional contributions in the same way as if they had received that money as salary or wages and had chosen to make a non-concessional contribution.

Treasury estimates that this reform will reduce the tax liability of around 41,000 people in 2013-14, by around $1,300 on average. Around 59,000 people on the top marginal tax rate will have a slightly larger tax liability due to the interest charge.

This reform will cost $55 million over the forward estimates period.

Extending the normal deeming rules to superannuation account-based income streams

The Government will extend the normal deeming rules to superannuation account-based income streams for the purposes of the pension income test to ensure all financial investments are assessed fairly and under the same rules.

Under the change announced today, standard pension deeming arrangements will apply to new superannuation account-based income streams assessed under the pension income test rules after 1 January 2015.

All products held by pensioners before 1 January 2015 will be grandfathered indefinitely and continue to be assessed under the existing rules for the life of the product so no current pensioner will be affected, unless they choose to change products.

Superannuation account-based income streams are a form of investment that provide the holder with a tax-free retirement income stream and flexible access to their capital.

Income from this type of investment currently receives highly concessional treatment under pension income testing arrangements compared with income from similar assets, such as dividends from shares or interest from term deposits which is subject to deeming.

This inequity in the income testing rules means that pensioners with similar levels of financial assets receive different amounts of pension.

This reform is a recommendation of the Pension Review and the Australia’s Future Tax System Review. It is a simple and common sense extension of the normal deeming rules that will ensure a fairer and more sustainable age pension.

This reform will save $158 million over the forward estimates period.

Extending concessional tax treatment to deferred lifetime annuities
The Government will encourage the take-up of deferred lifetime annuities (DLAs), by providing these products with the same concessional tax treatment that superannuation assets supporting income streams receive. This reform will apply from 1 July 2014.

The superannuation industry has called for this reform, including at the Government’s Tax Forum in October 2011 and during meetings of the Government’s Superannuation Roundtable.

This reform will have no financial impact over the forward estimates period.

Further reforming the arrangements for lost superannuation

The Government has put in place a number of initiatives through the Australian Taxation Office (ATO) to help reunite members with lost super accounts. These initiatives have proven highly successful, with the value of lost super held by funds falling by 10 per cent (from
$20.2 billion to $18.1 billion) and the number of lost accounts falling by 30 per cent (from 5.0 million to 3.5 million) over the 18 months to 31 December 2012.

In the 2012-13 Mid-Year Economic and Fiscal Outlook, the Government announced that for the first time, interest will be paid from 1 July 2013 on all lost superannuation accounts reclaimed from the ATO (at a rate equivalent to Consumer Price Index inflation). It also announced that the account balance threshold below which inactive accounts, and accounts of uncontactable members, are required to be transferred to the ATO will be increased to $2,000, to ensure they are properly protected from being eroded by fees and charges.

The Government will further increase the account balance threshold to $2,500 from 31 December 2015, and to $3,000 from 31 December 2016. Treasury analysis shows that:

  • A 20-year-old with $3,000 in an inactive superannuation account will be able to claim around $3,394 from the ATO after five years, a boost to their superannuation savings of around $671 compared with what the balance would be if their account remained with their fund.

  • A 30-year-old with $3,000 in an inactive superannuation account will be able to claim around $3,394 from the ATO after five years, a boost to their superannuation savings of around $898 compared with what the balance would be if their account remained with their fund.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Latest posts by Houses and Holes (see all)

Comments

  1. I just watched the presser. Both Swan & Shorten stressed the long period of review (Treasury paper last year) and lots of industry consultation. Also stressed need to depoliticise super and take a long term view, hence the council, and lengthy grandfathering. So perhaps you’re being a tad unfair claiming these changes were rushed.

    I think they’ve come up with some pretty reasonable public policy. I would find it difficult to have any sympathy for those who think they are hard done by if getting $100,000 tax free income stream from their super pension.

    • The notion that any ‘pensioner’ is allowed to have 100k of tax free income is utterly ridiculous period.

      It should be taxed the same as any other income and the thinly disguised theft on contribution abolished.

      • Its class warfare. If a family on $250K is struggling then surely a pensioner on $100K tax free would be struggling as well?

        It is a raid on people … there are shades of Cyprus about it. — T. Abbott.

    • It’s not the income that will be getting taxed- it’s the investment earnings. On the treasury calcs that would be individuals on over $2 mill!

      And the changes to DB pensions- obviously someone is running scared of accusations that gov’t pensions not being taxed

      • Alex Heyworth

        One problem I see with this is that “income” in your super fund/allocated pension is likely to be defined as increase in the capital amount over a year. People with a high proportion of equities in their super fund/allocated pension are likely to occasionally get a $100,000 increase with total assets well below $2m, given that it is not uncommon for the ASX200 to rise 30% or more in a year. Another issue: what are they doing about years when funds make losses? Will these be carried over to offset against future gains? What about the many people whose funds have yet to regain anything like their 2007 level?

        I bet Treasury have not even thought of these issues yet. More half-baked policy on the run from the ivory tower.

  2. Why are we surprised there’s no touching property? That might have been seen as something, shiver, macro, and we know there will be none of that sort of mucking about allowed….

  3. From our Prime Minister in waiting…

    But Opposition Leader Tony Abbott has vowed to ”fight ferociously” to block Labor’s latest changes to superannuation.
    ”It is a raid on people,” Mr Abbott told reporters in Melbourne on Friday. ”Every time a government raids people’s funds, there are shades of Cyprus about it.”

    • Abbott is incredible. What a shouty sort of character he is!

      I mean, there’s no doubt that we have a weak, incompetent government that has no courage, bereft of ideas and has no idea what it stands for. We deserve better. But Abbott’s hyperventilating like this surely does him no favours. Based on this sort of behaviour, I have no faith in an Abbott government to do any sort of meaningful cost cutting. Any cuts of any magnitude to any program is greeted with hysterical shouting and opposition. He needs to calm down and be a little more measures.

  4. What a non-event. The rort takes place at the contributions stage, not at the earnings stage. Basically they haven’t done anything.

    • The rorting takes place much earlier than that. I struggle to find many highly-paid (leeches) that actually contribute anything to society.

      • It’s probably good politics by Labor. Abbott’s backed himself into a corner with his rhetoric. Will the broader population really care about 16,000 retirees?

        • You’d have to think 99.999999% of Australians would be ecstatic if they could retire on $100K p.a. tax free.

      • I hope you’ve got your dollars under the mattress, Lorax. Or better still, buried in the backyard. Tony reckons the government’s coming for it.

    • Is there a bit of a sleeper in there with changes to the deeming provisions for super pensions? I’m not fully aware of how concessionally super income streams area treated right now. Can anyone up with that explain what the deeming changes will mean in practice?

      • Poor form replying to myself (forgive me) but I found this:

        http://thesmsfcoach.com.au/2013/04/05/new-changes-to-superannuation-in-summary-for-smsf-trustees/:

        “Income Streams will be Deemed like non-superannuation assets

        Under the change announced today, standard pension deeming arrangements will apply to new superannuation account-based income streams assessed under the pension income test rules after 1 January 2015.

        Instead of the concessional treatment of Account Based Pensions currently for those accessing an Aged Pension, they will be deemed like normal assets. This will affect those on the borderline of $55K income for a single person and $80K for a couple who previously benefited from deductible amounts on their account based or allocated pensions.”

        Good policy in my opinion, but I suspect this one will produce some serious whinging as it could reduce pension payments in some cases (an effect which is the desired policy objective of the entire compulsory superannuation scheme).

        • thomickersMEMBER

          this will most likely affect anyone on commonwealth service pensions from 2015 who will also have an account based income stream for the deductible income strategies (I will miss this strategy).

          Most people who got employer contributions through their career are pretty much asset test affected so the deeming rates applied to income streams should not disadvantage ‘normal’ people.

    • Agree. Storm in a teacup. And it makes Abbott’s frothing at the mouth just seem all the more overdone.

  5. Diogenes the CynicMEMBER

    The depressing thing about this episode is that the Government has again caved in to the rent seekers, worried about an advertising campaign against them in an election. Green light to all vested interests, threaten an ad campaign and watch the Federal Government crumple.

    The changes are mainly tinkering at the edges. Expect more tinkering from future governments, too much honey in that super pot.

  6. I thought that they would at least bring back a reasonable benefits test, even a generous one and tax excess contributions at the marginal rate of the contributor, even if they were made through salary sacrifice.

  7. I’m amazed at that press release. Different texts, font sizes, no formatting, a terrible looking document. That’s the best they can do??

    Wayne Swan alone was getting paid a salary of $390,627 last year, let alone the cost of the rest of his department. We wouldn’t tolerate that from our secretary on <$20/hr.

    • With 18 years in parliament, Swan will qualify for a pension of 75% of salary ($293,000 pa) if, as polls predict, he is voted out in September. And if ALP is voted out, these superannuation change won’t pass parliament, and Swan’s pension will be tax-free.

  8. A good article, but with small error, H&H. The proposed super change does not apply to those ‘with assets over $2 million’, it applies to those with earnings over $100,000. The trouble is, super fund earnings vary greatly from year to year, and also vary greatly between investment options, so in a good year those with less than $500k in Australian shares could be liable (>20% returns are quite common), whilst in a bad year (zero or negative returns) nobody would be liable. I’m not worried by this new tax – I would rather pay 15% of all earnings over $100k (lucky me!) than suffer far worse ravages from some of the other crazy super tax ideas that have been floated!

    • Mark HeydonMEMBER

      In your example, the return would only be 20% as far as the tax man is concerned if all capital growth were realised. This is another reason why anyone with any reasonable amount in super should be investing directly, so they can control the timing of realisation of capital gains, rather than via a managed fund, where the managers continually churn the portfolio and crystallise capital gains.

      By the way, does anyone know if the 50% discount on capital gains survives the new $100,000 threshold?

      • Mark,
        I think we’ll have to wait for the draft legislation to know for sure.

        It seems likely that the Gov’t will calculate the $100K threshold based on existing Superannuation tax rules.

        If this is the case, then the existing 1/3rd CGT discount on the sale of assets held > 12 months could still be utilised.

        But the wording in today’s Press Releases isn’t too clear – it’s possible that a different measure of “income” will be used in determining the $100K threshold.

    • thomickersMEMBER

      I think the tax $100,000 is only applied to income streams.

      The funny thing about this tax formula is that it changes the master trust structure.

      Super & Pension managed funds have different master trust structures (1 being taxed @15% on earnings then distributed to fund members & the other @ 0% then distributed to fund members).

      Its going to create a headache for superannuation fund accountants when figuring out the tax in pension and will probably raise investment management cost expenses by a few bps.

      • It will create a headache, but my understanding of the announcement it is the total earnings on investments in pension phase for the individual- ie if someone has two (or more) income streams, and none of them have earnings individually over $100k but collectively do, they will need to be charged tax. Who does this?

        If that isn’t how they word it, I can guarantee that the next set of advisor recs to people using income streams will be to make sure no income stream balance is above $500k

        • Hey Persnickety, the recent MySuper changes will probably help the Gov’t prevent these shenanigans.

          Now that TFNs can be used to match superannuation accounts, the ATO will probably be able to data-match and identify multiple account holders.

          You’re right that it’ll still be a nightmare to implment, though!

        • thomickersMEMBER

          “if someone has two (or more) income streams, and none of them have earnings individually over $100k but collectively do, they will need to be charged tax. Who does this?”

          I never thought of this but it would require a massive change to how the ATO oversees superannuation charges.

          my point was that most pooled managed funds in super are taxed internally with all members paying the same taxrate according to their share/exposure.

          This retrospective tax is more practical in SMSF pensions, where there are only 1-4 members in the fund.

  9. General Disarray

    Gottliebson is already claiming this one.

    For a government supposedly full of ex-union heavies they sure do back away from a fight easily.

  10. Brogden has called off his attack, but Abbott vows to fight on. Shades of Cyprus I tell you!

    • And we await the next instalment of the skullduggery this Govt can concieve to get it’s hands on our income. Roll on Sept.

  11. I think (for once) the government are on a winner here. There is really very little that offends or is indefensible about their proposed changes. They have introduced a long term focus, AND have applied the same changes to affect their own defined benefits schemes. All good. It makes Abbott’s claims of a “hit” look pretty silly.

    Also consider the many years of heavy investment of institutional energy and policy committment to superannuation, a core part of the “social wage” of the Hawke/Keating era, that both political and industrial sides of Labor share. Look at the size and scale of the “industry funds”. I think this is a genuine point of policy differentiation and a good story for the ALP to tell.

    In contrast, the looney right over at the IPA passionately detests the whole idea of compulsory super and detest even more that the unions have made such a success of it. But one example:

    http://ipa.org.au/news/2571/slay-the-super-sacred-cow

    As to what Abbott’s policy would be in Govt, well that’s anyone’s guess.

    So I think this was about the Gov building on a strength and absolutely not picking fights. Early days, but I think they’ve pulled it off.

    • pru,

      In general I think you are right.It’s hard though to fathom why these changes must be timed as they have in this environment – given the public flack they have taken even from their own side.

      What the takeaway may well be with the electorate though is growing anxiety and distrust , knowing Gillard, Swan and Co are behind doors with the beancounters dreaming up new and inventive ways of parting you from your income – which in the case or retirement has been structured based on long term planning assuming fixed goal posts from Govts.

      It’s not at all a good look.

      • I agree with you GSM. That “takeaway” you mention is straight out of the “chaos narrative” which the opposition and elements of the media are pushing at every opportunity. It may not be a “good look” for those whose engagement with politics is the 3 word slogans and sound bites on the 60 second slab of politics on the nightly news. The fear that can be generated by unspecified regulatory risk is palpable, as the recent weeks have shown. Abbott is certainly a master of this line of attack, and he continues to just walk away from any presser once the questions get him off message (he did that today, yet again).

        But any serious public policy discussion and debate faces the same threat. You might say we as society suffer political ADD – Attention Deficit Disorder. Most issues, and most certainly superannuation, are complex, hard to understand with any depth, policy solutions take long times to implement and review, have unintended consequences and so on and so forth. It’s damned hard.

        That’s why public sites like this, where the engaged and interested can educate themselves and canvass opinion, are such a welcome addition to the body politic.

        • pru,

          “the “chaos narrative” which the opposition and elements of the media are pushing at every opportunity.”

          It’s not a “narrative” though. The chaos real. And the media don’t have to make it up because Govt is providing the substance of it week after week.

          If Policy was developed with even a modicum of considered debate and aforethought to benefit all Australia rather than the Unionised sectors, we would not be seeing the trail of policy rubble strewn about us over the last few years. The narrative you refer to is of the Govts own making.

          • I’ll just have to put my disagreement with you on the record GSM. After the election I didn’t think the government would last until that Christmas with the numbers so tight. Its not only lasted, but, if you care to look, there is actually a very respectable record of legislative achievement across a wide range of policy areas. Good news that has been practically ignored by the main stream media (understandable – it doesn’t sell). Any slip up or internal issues, OTOH, has been massively amplified.

          • pru,

            Just because it is legislated doesnt mean it is “good”. That is for public opinion to decide. Personally, I would call it far from respectable given that key pieces had no mandate.

            If you are calling the public humiliation of an elected popular Labor PM, twice, the outcasting of the Labor elders and front bench, the capitulation to the minority extemist Greens with wasted taxpayer Billions and the deaths of hundreds at sea mere slip ups; then yes I too will record my complete disagreement with you .

            This is our Govt pru, not a backyard cricket game for entertainment.

  12. innocent bystander

    hmmm, sleeper in the implementation perhaps?
    all those buying property inside their SMSF thinking the CG will be tax free might find it taxed if the CG is over $100k.

    • innocent bystander

      Special arrangements will apply for capital gains on assets purchased before 1 July 2014:
      For assets that were purchased before 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024;
      For assets that are purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014; and
      For assets that are purchased from 1 July 2014, the reform will apply to the entire capital gain.

      from the media release:
      http://www.treasurer.gov.au/wmsDisplayDocs.aspx?doc=pressreleases/2013/040.htm&PageID=003&min=wms&Year=&DocType=0

        • innocent bystander

          nah,simple 🙂
          1) don’t buy property inside your SMSF if you can’t cop the 15% tax on the CG
          2) you have got 11 years to get rid of the existing property investment(s)

          • thomickersMEMBER

            trust me… I won’t be delivering property advice.

            but down the track, a prospective client will have an SMSF property in pension phase…and go “I HAVE TO PAY TAX”?

  13. Diogenes the CynicMEMBER

    Most people seem to have missed the changes to the deeming rules. They are significant and will lower age pension receipts for quite a lot of people.

    To qualify for the age pension, you must satisfy several tests, age, citizenship etc and the income and asset test. Centrelink pays the age pension based upon what would give the recipient the lower age pension receipt. So you have two financial hurdles to jump to maximise your age pension. There is no change to the asset test with this policy. There is a significant change to the income test.

    An account based pension is simply a pension from private super in the post 2007 regime. It is 100% assessable on the asset test. On the income side there is/was a deduction based upon your life expectancy basically your account based pension balance divided by the number of years of life expectancy when the pension was started. This means your deeming income from an account based pension is often quite low for the purposes of the Centrelink income test ie you receive a higher age pension as a result. This change means that your deeming income as assessed by Centrelink on the income test will increase by 4% of assets above $75,600. In some cases people will no longer qualify for an age pension or will see a significantly reduced age pension.

    It will take a while for the effect of this change to percolate through the system but some will be hopping mad.

    • Nice explanation, thankyou. I think this one doesn’t kick in till 1 Jan 2015, and current pensions are grandfathered, so unless people change products, no current pensioner will be affected.

    • thomickersMEMBER

      read my post above.

      the deeming rules on pensions won’t affect those who are assessed on account based pensions (the pension structure of the ordinary worker).

      Its those claiming defined benefit income stream/ public service pension in 2015 along with any super benefits they wish to convert to an account based pension.

      • innocent bystander

        not sure that is right?
        it does affect account based pensions, but new ones from 1/1/2015.
        which seems to me those with Super and pension will be getting a cut to the pension.

        • thomickersMEMBER

          Post above was covering Centrelink Strategies post 2015. $500,000 in super/outside super/pension for example is asset tested is calculating deemed income (the assets test will give you the lower centrelink age pension payment.

          but some public servants are in a situation where they receive a public service pension and have accumulation assets, which leads to them becoming income tested. they improve their income test when they convert into pension phase and get an “income deductible” component, which is far superior than the deeming rate structure.

    • This is interesting as it will make term certain annuities more favourable, ie greater than 5 years which also means a larger allocation to govt debt. This also ties in with a return to the idea of deferred annuities which will be given tax exempt status.

  14. ceteris paribus

    Labor running scared. Quibbling about pennies in this major redistribution racket to the rich.

    I think the sleeper might be the deeming change to the super income streams of the middle. Quiet way to tighten the means test on the pension for the upcoming generations, who seem to lose out again.

    I really don’t know why Labor keeps on mouthing fairness when clearly they are only interested in re-election. They are absolutely pathetic when challenged by the media lobby.

    Though I hate to say it, even Robb might have done better in addressing the whole superannuation racket, at least from a sustainability perspective, if not a fairness perspective.

    • The ALP is a vaccuous, empty shell at the moment. Nothing they do makes a great deal of sense. Just like zombies, they’re just marking time until they spend a lengthy period in opposition trying to work out just what they stand for and why we should give them a chance to govern again at sometime and the not too far off future.

  15. It really is all a big joke as the average boomer male Super is approx $60k and female boomer Super id $0.

    THEY INTRODUCED COMPULSORY SUPER 20 YEARS TOO LATE!!!!