Super changes to cost low income earners $27k

By Leith van Onselen While Robert Gottliebsen celebrates yesterday’s win for wealthy retirees, details have emerged about the cost of the Government’s super changes on lower income Australians. As explained yesterday, the new Coalition Government jettisoned the former Labor Government’s planned changes to superannuation, which would have seen tax concessions reduced on super funds earning


Making superannuation sustainable

By Leith van Onselen ABC’s The Business aired an interesting segment last night on the widespread push by the wealth management industry for Australians to turn their retirement nest eggs into income streams so that they don’t run out of superannuation too early – either by burning through their retirement savings or living longer than


The future’s millionaire pauper

From the SMH: Today’s young workers can expect to have an average $1.1 million in superannuation when they retire but it won’t be enough to maintain a comfortable post-work lifestyle. New research by Deloitte has found a 30-year-old worker on an average salary of $60,000 a year will have an estimated $1.1 million in super


Boomers stressing Australia’s superannuation system

By Leith van Onselen Last month, I asked whether the Baby Boomer generation had blown their retirement following a stinging critique by CPA Australia, which argued that many Baby Boomers had been spending and running-up big debts in anticipation of receiving a superannuation lump sum once they reach retirement, leaving them likely to be reliant


Have the boomers blown their retirement?

By Leith van Onselen The weekend edition of the Australian Financial Review published a stinging critique of the Baby Boomer generation, which it claims has blown its retirement savings by running-up debts on property and consumption: “They have already spent all of their super before their first day of retirement,” says Simon Kelly, a professor


Superannuation is inequitable and unsustainable

By Leith van Onselen Fairfax’s Michael West has published a ripper article questioning the merits of Australia’s superannuation system, which he argues is overly generous to higher income earners. From The Age: Super tax concessions cost the taxpayer about $32 billion a year, according to Treasury. The bulk of this, says [actuary Geoff] Dunsford, goes


Five year freeze on super changes

Fresh from Treasurer Bowen’s fax machine: The Rudd Labor Government will make no major changes to superannuation tax policy for five-year periods, promoting confidence and stability in the superannuation system. This will be enshrined in legislation by a re-elected Rudd Labor Government. This will give Australians the confidence to make investment decisions in the knowledge


Upper class welfare and the age of entitlement

By Leith van Onselen Matt Cowgill has today published a ripper article in The Guardian decrying the huge amount of tax concessions lavished on wealthy Australians, which are highly inequitable and cost the Budget billions of dollars in foregone revenue: We do a lot of spending through the tax code. Treasury estimates that all the


ASFA targets super lump sums

By Leith van Onselen Today, the Pascometer has published an interesting article outlining a proposal by the Association of Super Funds of Australia (ASFA) to tax superannuation lump sum withdrawals in order to prevent retirees from running down their retirement savings. From Business Day: The superannuation industry’s peak body wants a 15 per cent tax


ASIC warns on spruikers as SMSFs leverage into property

By Leith van Onselen The Australian Securities and Investments Commission (ASIC) yesterday released a report on Self Managed Super Funds (SMSFs), which summarises the findings of its 2012 investigation into risks in the SMSF sector, based on 18 entities that provided a financial service involving the establishment of an SMSF. The Report shows that SMSFs


Super changes will hit saving strategies

Reporting on the $100K limit across multiple funds, pain and no gain for Industry Funds. The Government proposal to tax superannuation pensions on income over $100,000 seems simple and not too complicated until you look in to it in more detail as the administrators are starting to do. How will the government legislate so that


Super changes puncture hysteria balloon

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


SMSF property on the block in super reforms

From the AFR this morning: …former Labor superannuation minister Nick Sherry has listed the generous compulsory contributions for federal public servants as one of three areas of superannuation he says are no longer sustainable. Mr Sherry, who stepped down as minister in December 2011 and is now a consultant and corporate adviser on retirement incomes,


Is a $250k household poor?

Apparently, yes. Poor enough to feel sorry for yourself anyway. From The Age today: Former chief whip Joel Fitzgibbon has joined other Labor MPs concerned about the prospect of taxing the superannuation earnings of the wealthy. After the Prime Minister, Julia Gillard, again refused to rule out such a tax, Mr Fitzgibbon feared Labor might


The future of retirement

By Leith van Onselen HSBC earlier in the week released a detail survey entitled The Future of Retirement: A new reality, which analyses global retirement trends. The survey findings are based on a representative online survey of 15,000 people in 15 countries, and covered people of working age (25 and over) and those in retirement. The


Will the young save for when they’re 80?

The Association of Superannuation Funds of Australia (ASFA) invited from Prime Minister Paul Keating to give an address at its national conference. His topic was: “The future of super: Does retirement income public policy and the design of the super system need to move in a new direction?” Keating focused on the longevity risk and


Treasury softens up SMSF for regulation

  By Chris Becker The Treasury has added to the campaign to take the “self” away from Self-Managed Super Funds (SMSF or DIY) with some very interesting comments coming out Association of Superannuation Funds of Australia conference yesterday. From Fairfax: THE head of the federal Treasury has warned that self-managed super funds have become so popular that


ATO backs off an SMSF property crunch

In November 2011, a draft tax ruling (TR2011/D3) by the ATO caused concern among Self Managed Superannuation Fund trustees and property investors in particular.  The ruling suggested that the pension tax exemption ceases automatically upon death (unless a reversionary pension was in place). Under those proposed rules, if an SMSF member died with any assets, including a


Simply stupid superannuation

By Chris Becker Superannuation is one of, if not the most difficult financial constructs of the modern age. Forget collaterised debt obligations, interest rate swaps or contracts for difference. The complexity involved for what should be a simple proposition – save some money for retirement so the government doesn’t have to – has boiled over in


Is super for saving or speculating?

APRA recently released its latest annual results on the performance (for year ending June 2011) of non-self managed superannuation funds, i.e the retail, industry and corporate super funds, which represent about 2/3rds of total superannuation “savings”. Strikingly, the value and number of self-managed super funds (SMSF) has increased, the latter by 7.2% whilst the remaining


Weekend Musing: getting super right

This is a guest post from long time reader Jackson, who I have been in correspondence with since I started my articles on superannuation. The following analysis was done completely independently of my own research: There has been a lot of recent chatter about the asset allocation of superannuation, with an emerging contrarian view that


No super for you (updated)

With the end of the calendar year approaching and with the market still oscillating around its lows, super funds are scrambling to put a good light on their meagre returns. The news today for non-self managed funds was foreboding: Research firm Chant West estimates that the average fund will have shrunk in value by around


In super, the tortoise always wins

We all bemoan the state of our super when we open our statements each year particularly given the rolling ongoing crises that beset the share market. Yet the common wisdom is to always look to the long term and eschew focusing on the short term gyrations. You’ve likely heard that to fund your retirement, your


Tackle risk for super returns

Yesterday SuperRatings issued its September results for Australian superannuation funds. September continued the poor performance of this year, with year to date returns for a balanced fund of minus 4.88%. Eighty percent of investors have their super in a balanced fund so the pain is widespread. It doesn’t get much better when we look at


How safe is your super?

As the Great Moderation passes by and the Great Volatility takes its place, the investing world is glacially facing up to the fact that a return OF your money is just as important as a return ON your money. The past 30 years have allowed all and sundry to “fuggedaboutit” or “she’ll be right mate”


Relying on stock market averages

In my research putting together my articles on Asset Allocation in Super, I’ve collated the data that supports the thesis that investing in Australian shares is not as lucrative as the financial industry would have you believe. The standard industry myth is that the stock market provides 9% returns on average. I’ll quote broker Marcus


The problem with asset allocation

What is asset allocation and why discuss it? Surely super is all about putting money away for retirement: how hard can that be? In this post, I will outline the conventional thinking regarding asset allocation and why it’s mostly wrong. The empirical evidence regarding this contention is overwhelming and stark. The major academic theories that


A super question (updated)

Reader, Bamboozled, recently left a comment on my “Trouble with Funds Management” post, asking what direction to go with her super: I’m a 30 something trying to consolidate a sizeable sum spread across 4 funds into something that resembles a reasonable super bet. At the most basic level I have 2 lots of dosh in corporate


Transitional Planning for Boomers

Readers of MacroBusiness have turned my attention to a recent “AskNoel” question on Domain from 2 (early) baby boomer investors. Q. I’m 48 and my husband is 55. As a result of renovations blowing out to $300,000, our mortgage is $690,000.  Our home is worth $1.1 million. We have two positively geared investment properties, owing