Superannuation

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Retail super funds’ decade of rorting revealed

By Leith van Onselen Audited performance data provided to the Australian Prudential Regulation Authority (APRA) has revealed that the biggest superannuation fund operated by each of Australia’s four major banks, along with the largest super funds operated by AMP and IOOF, yielded total average annual returns of 2.1% to 3.1% cent in the decade to

11

Superannuation not so super for Federal Budget

By Leith van Onselen The Australian’s Adam Creighton has penned another excellent article attacking the cost of Australia’s compulsory superannuation system on the Federal Budget: The superannuation guarantee increases costs to the government, which therefore ­requires a higher tax burden. That’s because the cost of the superannuation tax concessions is greater than the savings to

4

PC exposes Australia’s superannuation rip-off

By Leith van Onselen The Productivity Commission (PC) has released its long awaited 500-plus page draft report on Australia’s $2.6 trillion superannuation industry, which claims that five million member accounts are being short-changed, cites excessive fees and poor governance, and calls for substantive reform. Below are the key points: Australia’s super system needs to adapt

21

Australia’s super system is a “giant con”

By Leith van Onselen The Australian’s Judith Sloan has slammed Paul Keating’s latest spruik calling for Australia’s superannuation guarantee to be raised from 9.5% to 12%, labelling compulsory superannuation a “giant con”: It is becoming increasingly apparent that Australia’s system of compulsory superannuation is essen­tially a giant con… When it comes to the dependence on

13

Paul Keating dazed and confused on superannuation

By Leith van Onselen The architect of Australia’s compulsory superannuation system has urged the federal government to raise Australia’s superannuation guarantee (i.e. compulsory superannuation contributions) from 9.5% to 12%, claiming it would compensate workers for productivity gains during a period of low wages growth. From The AFR: Australia’s business community should back an immediate superannuation

3

Compulsory super: a gift to industry paid for by you

By Leith van Onselen Fairfax’s Peter Martin has joined the chorus urging the federal government to abandon scheduled plans to raise Australia’s superannuation guarantee (i.e. compulsory superannuation contributions) from 9.5%: … people who work in the finance industry and the trade union movement and the employer organisations… would get an extra $10 billion a year

4

Kelly O’Dwyer: Compulsory super robbing lower-paid

By Leith van Onselen The former Gillard Labor Government had originally legislated for the superannuation guarantee (i.e. compulsory superannuation contributions) to rise to 12% in 2019. However, the Abbott government, which inherited a superannuation guarantee rate of 9.25%, froze it at 9.5% until 1 July 2021 and delayed the scheduled increase to 12% until 1

15

Labor urged to hold off raising super guarantee

By Leith van Onselen The former Gillard Labor Government had originally legislated for the superannuation guarantee (i.e. compulsory superannuation contributions) to rise to 12% in 2019. However, the Abbott government, which inherited a superannuation guarantee rate of 9.25%, froze it at 9.5% until 1 July 2021 and delayed the scheduled increase to 12% until 1

29

Memo to Labor: Don’t lift the superannuation guarantee

By Leith van Onselen It appears the Labor Party is still considering speeding up the timetable for lifting Australia’s superannuation guarantee (i.e. compulsory superannuation contributions) from the current date of 2025 : Revenue and Financial Services Minister Kelly O’Dwyer warned Labor against meddling with the current trajectory in an environment of flat wages growth. “Increasing

16

Industry Super: Labor’s franking reform is equitable

By Leith van Onselen Industry Super Australia’s Matt Linden says Labor’s revised policy on cash refunds for excess dividend imputation credits is fairer and will primarily affect the wealthiest households. An analysis of the policy on behalf of ISA suggests that nearly 86% of the loss of imputation credits will be borne by the wealthiest

14

Super tax breaks are a poor way to close retirement income gap

By Leith van Onselen The Grattan Institute has released a new paper for the Australian Gender Economics Workshop 2018, which argues that Australia’s superannuation system is Australia’s retirement income system is not working for the poorest Australians, who are disproportionately women. Grattan also argues that expanding already-generous caps on superannuation contributions would likely worsen gender

12

APRA: Australia’s super system too complex and costly

By Leith van Onselen Just as Australia’s bank-owned superannuation funds are calling for greater competition and more choice, Australian Prudential Regulation Authority (APRA) member, Helen Rowell, has given a speech to the Association of Superannuation Funds of Australia conference in Sydney, whereby she expressed unhappiness at the “astonishing” complexity of Australia’s superannuation system which is

40

Australia’s super fat cats are getting nervous

By Leith van Onselen The chief executive of the Association of Superannuation Funds of Australia, Martin Fahy, is getting nervous. He fears a ‘populist’ future government might end the compulsory 9.%5 superannuation guarantee, thereby ending the rivers of gold flowing to the sector. From The AFR: The scenario goes something like this: a populist politician

10

Keating: Hands off Australia’s super system

By Leith van Onselen Following former treasurer Peter Costello’s recent call for compulsory superannuation contributions to be taken out of the hands of bank-run retail super funds and union-backed industry super funds, who are gouging members with excessive fees, and instead be invested in a government-run fund, the man who initiated compulsory superannuation, Paul Keating,

31

The great superannuation rip-off

By Leith van Onselen Following former treasurer Peter Costello’s call last week for compulsory superannuation contributions to be taken out of the hands of bank-run retail super funds and union-backed industry super funds, who are gouging members with excessive fees, and instead be invested in a government-run fund, commentators at The Australian have unloaded on

28

Costello attacks the super fee gouge

By Leith van Onselen Former treasurer Peter Costello has argued that compulsory superannuation contributions should be taken out of the hands of bank-run retail super funds and union-backed industry super funds, who are gouging members with excessive fees. The chairman of the $133 billion Future Fund contends that this money should instead be invested in

14

Bloomies Crapstralia series targets Aussie retirement system

By Leith van Onselen Turns out that Bloomberg is not done with its Crapstralia series. After already rubbishing Australia’s economic structure, productivity, the NBN, the housing bubble, the scrotum share market, the energy disaster, and toxic privatisations, now Satyajit Das has questioned Australia’s retirements system: Australians make up barely 0.3 percent of the globe’s population

28

Wage suppression a time bomb for superannuation system

By Leith van Onselen The Australia Institute (TAI) has produced an interesting report warning that record low wages growth could significantly curtail Australian’s superannuation retirement savings, placing immense pressure on the Federal Budget. Below is the summary of the report along with some key charts: The record-slow pace of wage growth in Australia’s economy is

13

Forcing compulsory super onto lower-paid a retrograde step

By Leith van Onselen The The Association of Superannuation Funds of Australia (ASFA) is talking its own book again, calling on the government to extend Australia’s compulsory superannuation regime to low-paid workers. From The Australian: The Association of Superannuation Funds of Australia will issue a lengthy discussion paper urging the government to review superannuation contribution

15

Time to make financial planning tax deductable?

There has been a recent push in the planning fraternity to renew calls for upfront financial planning advice to be made tax deductible (as opposed to ongoing investment management fees etc). Tax deductibility is an interesting beast. From my experience meeting with hundreds of clients in various roles over the years, it sits at the

6

Spaceship deemed Space Cowboy

People in glass houses shouldn’t throw stones, so are we going to let Graham Hand toss a few rocks for us at of one of the larger players in the online superannuation space, Spaceship: Spaceship recently said it had almost reached $100 million under management, an incredible amount for a startup. On 1 June 2017, The Australian

7

Why the superannuation guarantee shouldn’t be raised

By Leith van Onselen The Australian’s Judith Sloan has published an article today arguing against raising the superannuation guarantee – the amount that employees must compulsorily contribute to super – to 12%, which has been recommended by a report written by Per Capita and commissioned by the Australian Services Union. According to Sloan, compulsory superannuation

13

Falling home ownership creates headaches for retirement system

By Leith van Onselen On Friday afternoon, The AFR posted a series of articles warning that the collapsing rates of home ownership among younger cohorts could ultimately cripple Australia’s retirement system. Consider first, the below article by Sally Patten and Jacob Greber: A steady slide in home-ownership rates is building up a fresh demographic headache

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Wealthy super tax breaks thrust back into spotlight

By Leith van Onselen Generous superannuation concessions provided to high-income earners was thrust back into the spot light last night in a report from ABC’s The Business (video above). The report discloses that very high income individuals, such as the CPA’s Alex Malley,  CBA boss Ian Narev, Telstra boss Andy Penn, and Wesfarmers boss Richard Goyder,

7

The bun fight over default super

By Leith van Onselen Debate over the optimal level of competition to manage Australia’s hundreds-of-billions in default superannuation savings has been raging for years. This debate has centered around evidence of superannuation funds gouging members with excessive fees, estimated at more than $20 billion a year. In 2014, the Murray Financial System Inquiry showed that

15

Banks’ superannuation fee gouge rolls on

By Leith van Onselen There are arguably few better businesses to be in than Australian superannuation. Thanks to compulsory contributions, set at 9.5% of employee wages currently, along with a largely fixed cost structure, the superannuation industry continues to rake it in, earning fat fees on everyone’s retirement nest egg. Nowhere is this cozy arrangement

20

Labor to block Coalition’s FHB super bribe

By Leith van Onselen In his post Budget speech delivered yesterday, Labor Shadow Treasurer, Chris Bowen, pledged to block the Coalition’s Budget measure allowing young Australians to make contributions into their superannuation for future use as a home deposit. From The New Daily: In his budget reply speech on Wednesday, Mr Bowen said most of

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Gotti the rent-seeker wails at modest super reforms

By Leith van Onselen After lobbying incessantly against the Turnbull Government’s modest reforms to superannuation announced in last year’s Budget, Robert Gottliebsen (aka “Gotti) has gone on another rant today against possible further changes affecting self-managed superannuation funds (SMSFs). From The Australian: Let’s hope that Treasurer Scott Morrison stays well away from superannuation changes in