Saturday, December 1, 2012

Julia Gillard wants to steal your super ! If Treasurer Wayne Swan knows what is good for him, he will be extraordinarily careful with his latest proposed bout of fiddling with Australia's $1.4 trillion superannuation system. BACK OFF WAYNE GOOSE !

The government wants to raid the super industry – remember the ATO tell us “it’s your money, just not yet”, well maybe never. The ALP have long cast their beady greedy eyes on super, below is a letter Alex Robson and I published in the AFR the day before the 2007 election.
It is surprising that Wayne Swan has rejected Peter Costello’s comments about ALP plans to dip into superannuation funds as “outright lies” (“Labor won’t dip into retirement cash: Swan”, November 21).
Perhaps Swan hasn’t read the ALP’s national platform and constitution, which was formally adopted at the ALP national conference in late April.
Anyone reading that document would see for themselves that the ALP plans to develop specific incentives and structures that will encourage super funds to invest in agriculture, manufacturing and infrastructure.
Furthermore, superannuation funds will be expected to invest in low-income housing and the transport network. To be sure, some of these “investments” are worthy of government attention, but if they were viable investment opportunities, super funds would have invested in them already.
Of course, the ALP is hardly going to be so vulgar as to introduce prescribed asset requirements for super funds, but we are promised that Labor in government will review existing public policy to enable greater involvement in infrastructure financing and delivery by Australia’s superannuation funds and also that trustees will be encouraged to evaluate and reduce negative social or environmental consequences of their activities.
What better way to do this than to invest in government pet projects?
The bottom line is this: the ALP itself has indicated that superannuation money will be invested in a range of areas and projects that trustees now have chosen not to invest in.
Swan needs to explain to us where the “outright lies” are to be found. Either Costello has lied, or Swan’s party platform is a lie.
The great irony is that compulsory super is a Labor reform and probably one of the least bad nanny-state policies that various governments have imposed on Australians. The other great irony is that the super industry is in dire need of reform, but not the sort of reform that enriches government at the expense of retirees.

IF Treasurer Wayne Swan knows what is good for him, he will be extraordinarily careful with his latest proposed bout of fiddling with Australia's $1.4 trillion superannuation system.
That care is needed for two basic reasons - it is voters' retirement money he is trying to grab with an election only a year away and the motive for trying to extricate further billions from superannuation is a short-term financial one to help balance the budget rather than being part of a well thought out reform process.
The fastest way for the Federal Government to get extra money out of the massive pool of superannuation is to increase the 15 per cent tax on contributions on the way in, the 15 per cent tax on fund earnings or to reintroduce taxes on withdrawals made after retirement.
Other changes such as getting rid of concessions for spouse contributions would be tinkering at the edges and wouldn't raise the required cash in time to rescue the beleaguered 2012-13 budget surplus, which in reality now looks much more likely to be a significant deficit.

To dress this up in the best political light, Swan would need to once again reach into his well developed class warfare grab-bag and show that the changes will only hit the "wealthy", leaving the average working superannuation saver unaffected.
Hopefully this time around he won't use the mining entrepreneurs as fodder in the debate, given that their wealth has been evaporating at an astonishing rate with the downturn in commodity prices.
An extra part of this class warfare theme would be to hit the large and growing number of Australians who use self-managed superannuation funds with claims that they are disproportionately rorting the system through measures such as switching personal assets into their funds and through transition to retirement pensions.
Moving against self-managed super could actually advantage the other main super players - retail and industry funds - and in political terms only risk enraging a group of mainly non-Labor small business owners and wealthier individuals who have turned to self-managed funds because they want to save costs, manage their affairs independently and use their fund as a form of estate planning.
It would be a huge mistake though.
Self-managed superannuation is the fastest growing industry sector by far with 36,000 new funds set up last year alone and $400 billion under management, making any specific attack to make it less appealing very risky.
There are many dangers with using the wealthy rorter attack, the most obvious being that the Australian public can see straight through that sort of spin and identify it as a grab for cash.
From the government side these sort of changes are savings measures or rorts and loopholes suddenly in urgent need of attention - to the public they are effectively extra taxes or tougher rules solely designed to grab more money from the nearest available source.
Superannuation is effectively the latest sitting duck ripe for a mining super profits tax-style plucking, particularly now that the mining duck has flown south before the first feather was even removed.
The reason Swan needs to be extra careful around superannuation changes is that it is very difficult to target one group of superannuation savers without spooking the lot.
Already the rapid pace of change within superannuation has caught many people unawares as they struggle to keep up with rule changes.
One example is the unexpected introduction of the $25,000 a year contribution limits even for those in their 50s who could formerly contribute $50,000 a year.
That single change has caused significant tax bills for many who were simply trying to boost an inadequate nest egg before retirement through extra voluntary contributions that were previously not only allowed but encouraged.
The very real danger with more changes is that many people will simply ditch making extra contributions to superannuation altogether and look to alternative retirement savings methods including negatively geared property and share portfolios, family trusts and insurance bonds.
These alternatives can also reduce government revenue substantially and don't necessarily come with the same benefit of reducing the numbers of people drawing an Age Pension.
Uncertainty is particularly damaging at a time when the percentage of wages going into superannuation is gradually rising from 9 per cent of salaries to 12 per cent by 2019 because this is money that is being set aside for a very long time.
As an example and using the current threshold for higher contributions tax, let's assume the government decides to further increase the contributions and/or earnings tax for everyone earning above $300,000 a year, enough to qualify them for a political attack on the basis that they are "wealthy rorters" who are robbing the general public of the 30 per cent difference between their marginal tax rate and the 15 per cent superannuation tax rate.
This is effectively the same as shooting fish in a barrel because those admittedly well-paid wage earners are still forced to put that money into superannuation even if the rules are changed, leaving them with a lower retirement benefit and a higher effective tax bill.
If a higher tax rate is applied to earnings then it is even a retrospective tax, given that the previous amount was contributed under a different set of rules and probably when their income was well below the new limit.
And what of that hypothetical $300,000 limit, would it be indexed over time or slowly scoop up a higher proportion of the workforce as what was once a very high income gradually moves down the income scale?
Taxation is all part of the unwritten but very real social contract that exists between the working public and the government over superannuation.
Workers endure the stick of compulsory withdrawals of their salary which they won't see until they are aged 55 or more because of the carrot of saving for retirement in a tax advantaged investment vehicle.
The government forgoes a significant amount of income tax revenue each year on those superannuation contributions - an estimated $30 billion in 2012-13 - on the basis that it will greatly reduce the drain of pension and health payments on future budgets.
By reducing that $30 billion of tax forgone through higher super taxes, that money and potentially much more is being added to future health and pension costs as the number of self-funded retirees with adequate retirement income falls.
In other words it would be a victory of short-term political and budgetary opportunism over long-term sensible retirement policies.
That doesn't mean it won't happen - the political landscape is littered with similar examples - but this is one kite Wayne Swan would be better to let flutter to the ground.

Search for lost superannuation

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You can search online for your lost superannuation easily and quickly using SuperSeeker
SuperSeeker will search the Lost Members Register and other ATO records includingSuperannuation holding accounts (SHA) special account records.

To access this online service

To access SuperSeeker you will need your
  • name
  • tax file number, and
  • date of birth.


SuperSeeker is also available as a 24 hour, 7 days a week self-help phone service on 13 28 65(make sure you have your tax file number and a pen and paper handy to take down any details provided).
For further assistance phone our information line on 13 10 20, Monday to Friday, 8:00am to 6:00pm.
Last Modified: Wednesday, 21 December 2005


  1. Superannuation is not guaranteed by any measure. Why doesn't the government guarantee superannuation (or underwrite it) just like they did for the banks to prevent a run on them? There is NO guarantee on superannuation savings and all it really does is provide a slush fund for the stock markets to play with. Really no different to the pokies addict that promises that if your give them $50, they'll turn it into $100. The difference being that these addicts want to charge you a fee to risk gambling your money. People are better off putting these funds in their own investments or using the funds to pay some or all of their mortgages so that they can release themselves from debt slavery rather than risking their hard earned wealth in the unknown.

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