Superannuation

47

Coalition starts making right noises on super

By Leith van Onselen Slowly but surely, the Coalition is beginning to see the light on superannuation, and acknowledging that the current make-up of the system is unsustainable for Australia’s long-term finances and ripe for fundamental reform. Today, Coalition MP, and former advisor to Peter Costello, Kelly O’Dwyer has penned a worthwhile piece in The

30

With superannuation, the worker ultimately pays

By Leith van Onselen Another day, another attack on the Coalition’s decision to pause the increase in compulsory superannuation (the ‘superannuation guarantee’) from 9.5% to 12%, arguing that it will rob ordinary workers. From The Guardian’s Van Badham; The deal negotiated by the government with Clive Palmer’s party to freeze increases to worker superannuation illustrates

18

Reith urges attack on grey gouge

By Leith van Onselen Former Howard Government minister, Peter Reith, over the weekend urged parliament to act decisively and early to wind-back generous tax concessions and benefits afforded to wealthier Australians, and not wait until the Budget and economy are in crisis. From The AFR: Mr Reith told The Australian ­Financial Review there was an

46

Increasing super would lower take home pay

By Leith van Onselen The Australian’s Adam Creighton has today debunked the commonly held mis-conception that the cost of raising compulsory super (the ‘superannuation guarantee’) from 9.5% to 12% would be borne by employers, not employees, through lower take-home pay: Penny Wong… on Lateline this week echoed remarks by other Labor politicians that workers would

27

Why Keating is dead wrong on super

By Leith van Onselen As expected, former Treasurer and Prime Minister, Paul Keating, has slammed the Abbott Government’s decision to delay the rise in compulsory superannuation by four years, describing the move as an act of “willful sabotage”. From The Guardian: Keating, who began Australia’s system of compulsory superannuation, said the decision was “an appalling

47

Nobody should cry over pause in super lift

By Leith van Onselen The whingers are out in force today bemoaning the Government’s decision yesterday, supported by the Palmer United Party (PUP), to delay the rise in compulsory superannuation by four years. Under the change, the superannuation guarantee – the amount that employers must contribute into employees’ super accounts – will be frozen at

68

SMSF lobby hogs the tax trough

By Leith van Onselen In an extraordinary showcase of self-interest, the lobby group representing self-managed super funds (SMSFs) – the SMSF Alliance – has slammed calls to tighten tax concessions around superannuation, arguing that the rich are entitled to their tax breaks. From The AFR: The $1.8 trillion superannuation industry has defended its generous tax

19

Shock horror! Super funds are gouging members

By Leith van Onselen Australian Super chief executive, Ian Silk, has bemoaned that the financial services industry is using the compulsory superannuation system to enrich themselves, rather than look after their members. From The AFR: As pressure grows on super funds to cut fees, Mr Silk on Tuesday warned there was a risk that savings

53

More warnings on SMSF property leverage

By Leith van Onselen Jeremy Cooper, chairman of Challenger’s retirement income area and former deputy chairman of the Australian Securities and Investments Commission, has warned that self-managed superannuation funds (SMSFs) are accumulating too much property debt, which poses a major risk to Australia’s financial system. From The AFR: “There’s enough leverage in society anyway…We leverage

27

Coalition continues to ignore super’s real problem

By Leith van Onselen The AFR is reporting today that the Abbott Government is considering lowering the annual mandatory amount that must be drawn down from account-based superannuation accounts in order to ensure that retirees funds last longer and are not eroded as fast during downturns: The Financial Services Council and the self-managed superannuation fund industry

20

Senator Leyonhjelm demands real retirement reform

By Leith van Onselen In his meeting with Treasury Hockey over the weekend, Senate crossbencher, David Leyonhjelm, reportedly demanded the Government properly means test the aged pension. From The Australian: Cutting wealthier pensioners out of the scheme would allow for a more generous pension for those most in need. The change could also involve creating

32

Kohler slams the super gravy train

By Leith van Onselen Business Spectator’s Alan Kohler has written a stinging critique of Australia’s superannuation system, slamming the high level of fees due in part to compulsory contributions and the lack of price regulation: A chart in the Financial System Inquiry’s interim report shows that since 2009 the average super fund has increased in

35

SMSF leveraged property in the spot light

By Leith van Onselen The draft report of the Murray Inquiry into Australia’s financial system, released last week, took direct aim at self-managed super funds (SMSFs) and leverage, warning that they could pose risks to the financial system and retirement savings: The use of leverage in superannuation funds to finance asset purchases is embryonic but

18

Murray Inquiry exposes superannuation’s flaws

By Leith van Onselen The draft report of the Murray Inquiry into Australia’s financial system has taken aim at the efficiency, equity and sustainability of Australia’s superannuation system. The first target is superannuation fees, which are far too high by global standards and are an unnecessary drain on Australia’s retirement savings: The operating costs of

6

ASIC warns on super fees

Cross-posted from Martin North’s DFA blog. ASIC today released a report into fee disclosure practices for super and managed investments.  The intention of the fee and cost disclosure requirements is to promote comparability of products. However, ASIC’s review of industry practices indicates that there is significant variation in the disclosure of fees and costs. A key

3

The great FOFA gouge

Cross-posted from Martin North’s DFA blog: Last week, the Future of Financial Advice regulations were tabled in Parliament, following the recently published Senatereview.  As currently incarnated they have the potential to drive a coach and horses through the original intentions of the FOFA reforms. Today we explore why this is so, and highlight some of the consequences for

14

Making superannuation sustainable (members)

By Leith van Onselen The Australian yesterday reported that the peak body representing the superannuation industry, the ­Association of Superannuation Funds of Australia (ASFA), has recommended that the government implement a lifetime cap on superannuation contributions – something lower than $2.5 million for a couple – as well as retention of the low-income superannuation contribution,

2

SMSFs get young

If you’ve ever wondered who it is that makes up MB’s 60k readers per week then here is your answer. From the AFR: The new trustee faces of Australia’s fastest growing superannuation sector, the $560 billion DIY super fund ­market, are younger, getting richer and willing to send more of their money offshore. According to statistics from the ­Australian Taxation Office, the age

10

More on the great super gouge

By Martin North, cross-posted from the Digital Finance Analytics Blog In an interesting speech yesterday Dr David Gruen Executive Director Macroeconomic Group presented some startling data to the assembled company at the CEDA State of the Nation 2014 event. Citing the Gratton Institute report he said “in 2013, Australian superannuation fees ranged from approximately 0.7

45

Gruen slams Australia’s exorbitant super fees

By Leith van Onselen Senior Australian Treasury official, Dr David Gruen, has today slammed Australia’s sky high superannuation fees, which cost members some $20 billion last year and are around three times greater than those prevailing in the United Kingdom. From Business Spectator: Australians spend around $20 billion annually on superannuation fees, which equates to

28

Amateurs continue to beat pros at super

By Chris Becker The self-managed super sector continues to outperform the so-called “pros”, according to NAB with average yearly returns (after fees) hovering near 7% compared to 4% From SMSF Advisor Online: A NAB analysis has demonstrated SMSFs outperformed APRA-regulated funds between 2005 and 2012. A Rice Warner analysis of APRA and ATO statistics commissioned

18

Everything that’s wrong with super in 900 words

By Leith van Onselen Do yourself a favour and head over to Eureka Street to read Brian Toohey’s latest article, Super’s Evil Empire on Shaky Ground. In less than 900 words, Toohey – a long-time advocate of equitable retirement policy and inter-generational fairness – surgically dissects everything that’s wrong with Australia’s compulsory superannuation system, including how

23

The super gouge needs fixing

By Leith van Onselen The AFR’s Agnes King has written a ripper article highlighting the egregious nature of Australia’s superannuation system, which has increasingly become a mechanism for richer older people to avoid paying tax, rather than a genuine means for Australians to pay for their own retirement and avoid drawing on the Aged Pension:

94

Keating: slug workers more to pay for ageing?

By Leith van Onselen Former Prime Minister, Paul Keating, seems to be losing his marbles in his old age, last night recommending that Australian workers get slugged another levy to cover “geriatric” care for people aged 80-plus: “We have to have, I believe, a commonwealth insurance scheme for the 80-100s with a calibrated, precise product,