Super changes 'not a hammer blow'

Superannuation Minister Bill Shorten says the changes won't be a  "hammer blow'' to people. Picture: Brad Hunter Source: The Australian

AUSTRALIAN workers will not forego potential pay rises as their employers foot the bill for compulsory increases to superannuation payments from July 1, Superannuation Minister Bill Shorten said.

In Brisbane today, Mr Shorten said increases to the superannuation guarantee from 9 per cent to 9.25 per cent in two months' time was not going to burden business and stop workers from getting a pay increase.

"I do believe that the modest increments we've proposed, we'll see people acquire more savings in retirement but it's not going to stop people getting a real wage increase,'' he said.

"I certainly believe that for most Australians it will be part of the mix of remuneration that will be worked through.''

The super guarantee of an employee's ordinary time contributions was originally set at 3 per cent and increased to 9 per cent in July 2002.

Mr Shorten said the incremental increases including the 0.25 per cent increase in July would not be a "hammer blow'' to people.

"When the superannuation legislation came in in 1992 ... what happened in the time was that superannuation went from 3 per cent to 9 per cent and unemployment fell by half,'' he said.

"It never led, increasing super from 3 per cent to 9 per cent, to a wages spike ever but real wages still grew during that time so I would submit to the confidence of history to demonstrate what I'll think will happen in the future.''

Mr Shorten also announced the hand-picked five members of a group that would oversee a Charter of Superannuation Adequacy and Sustainability.

He said the group would help guide the Reserve-Bank style Council of Superannuation Custodians established last month.

"Their task will be to advise on whether any of the proposed changes to Australia's superannuation by the Government of the day of whatever political stripe are consistent with an agreed charter of superannuation adequacy and sustainability,'' he said.

"The council itself will be an impartial and expert apolitical body that is able to act as custodians or stewards of a superannuation system reporting to Parliament on its sustainability.''

They will assess the future policy against the Charter and provide a report to be tabled in Parliament.

The charter group will include former Federal Court judge Alan Goldberg, the deputy chairman of the Australian Prudential Regulation Authority, Ross Jones; former Cooper Review chairman Jeremy Cooper; former Australian Super chair Elana Rubin and former MLC chief executive Steve Tucker.

Mr Shorten said superannuation in Australia today was worth about $1.5 trillion and is expected to rise to around $6 trillion by 2037.

View the original article here

New ideas take timing out of super

We need to recognise that our super industry is a young one, and will continue to evolve, writes John Brumby. Source: Supplied

ASK a golfer the secret to a booming drive, a batsman how to hit a big six, or a big AFL forward about marking inside 50 on the siren, and you will hear the same counterintuitive advice again and again: It's not about pure skill, but timing.

We should all take heed of this lesson when it comes to our superannuation.

In 2008, the Global Financial Crisis hammered home the critical importance of timing. Tens of thousands of Australians looking to conclude their working lives suddenly found their super balances decimated and their retirement plans in ruins.

Even those who had invested with super funds with past records of high average net returns found themselves affected by unfortunate timing.

Some of those retiring just after the GFC crash were up to 30 per cent behind those who pulled out just before, despite having near identical balances in 2007.

A 30 per cent difference in total balance can cut the length of time retirement savings will last in half -- from 20 to 10 years.

In industry jargon, such unfortunate timing is known as "sequencing risk".

The waxing and waning of the market over a working life will tend to balance out on average. But if it tanks just before you retire, it can sting far more than if it happens at the beginning of your career.

With four million Australians due to retire in the next decade, sequencing risk has rocketed to the attention of many.

Rather than thinking of super simply as a pot of gold tucked away for "the future", Australians are starting to consider how that pot can be protected.

Unfortunately, this risk is not the only issue facing those in retirement.

No one has a clear idea of how long they will live. Life expectancy, and therefore time spent in retirement, is a great unknown.

A 2011 MetLife Insurance study found that 52 per cent of Australians over 51 were "extremely concerned" about outliving their retirement savings.

The historical response to having inadequate savings to cope with this longevity risk has been to invest more aggressively. But even a well-managed aggressive approach leaves you open to risk.

It is clear that timing is critical. But unless your capacity to read the future is better than mine, you will have no way of accurately predicting if the time you decide to retire is going to correspond with a major market downturn. So what's the answer?

Some funds have started to tailor strategies to individual members and groups of like members, instead of lumping everyone together. But this addresses only part of the solution.

MTAA Super has spent two years working with MetLife Insurance to develop a new approach for industry funds offering a guaranteed income for life, payable as a pension, even if a member's account balance reaches zero. While the annual income can go up or down, the formula is certain, so pensioners can plan their retirement finances around it.

I believe this is a vital evolutionary step for the Australian superannuation system.

In the past, those seeking guaranteed income products havebeen bereft of flexible options, due to a system that is too heavily focused on simply achieving better than average rates of return.

The new "guaranteed income for life" products offer peace of mind in a way that more traditional approaches cannot.

Australia led the world when superannuation was introduced in the 1980s. We continue to lead, with the Federal Government recently boosting the super guarantee to 12 per cent. It requires only the briefest glance overseas to realise just how well we have handled our retirement planning.

We also need to recognise that our super industry is a young one, and will continue to evolve to meet the challenges of working and retiring Australians. I am optimistic we can manage the transition smoothly.

John Brumby is chair of MTAA Super and a former premier of Victoria.

View the original article here

New ideas take timing out of super

We need to recognise that our super industry is a young one, and will continue to evolve, writes John Brumby. Source: Supplied

ASK a golfer the secret to a booming drive, a batsman how to hit a big six, or a big AFL forward about marking inside 50 on the siren, and you will hear the same counterintuitive advice again and again: It's not about pure skill, but timing.

We should all take heed of this lesson when it comes to our superannuation.

In 2008, the Global Financial Crisis hammered home the critical importance of timing. Tens of thousands of Australians looking to conclude their working lives suddenly found their super balances decimated and their retirement plans in ruins.

Even those who had invested with super funds with past records of high average net returns found themselves affected by unfortunate timing.

Some of those retiring just after the GFC crash were up to 30 per cent behind those who pulled out just before, despite having near identical balances in 2007.

A 30 per cent difference in total balance can cut the length of time retirement savings will last in half -- from 20 to 10 years.

In industry jargon, such unfortunate timing is known as "sequencing risk".

The waxing and waning of the market over a working life will tend to balance out on average. But if it tanks just before you retire, it can sting far more than if it happens at the beginning of your career.

With four million Australians due to retire in the next decade, sequencing risk has rocketed to the attention of many.

Rather than thinking of super simply as a pot of gold tucked away for "the future", Australians are starting to consider how that pot can be protected.

Unfortunately, this risk is not the only issue facing those in retirement.

No one has a clear idea of how long they will live. Life expectancy, and therefore time spent in retirement, is a great unknown.

A 2011 MetLife Insurance study found that 52 per cent of Australians over 51 were "extremely concerned" about outliving their retirement savings.

The historical response to having inadequate savings to cope with this longevity risk has been to invest more aggressively. But even a well-managed aggressive approach leaves you open to risk.

It is clear that timing is critical. But unless your capacity to read the future is better than mine, you will have no way of accurately predicting if the time you decide to retire is going to correspond with a major market downturn. So what's the answer?

Some funds have started to tailor strategies to individual members and groups of like members, instead of lumping everyone together. But this addresses only part of the solution.

MTAA Super has spent two years working with MetLife Insurance to develop a new approach for industry funds offering a guaranteed income for life, payable as a pension, even if a member's account balance reaches zero. While the annual income can go up or down, the formula is certain, so pensioners can plan their retirement finances around it.

I believe this is a vital evolutionary step for the Australian superannuation system.

In the past, those seeking guaranteed income products havebeen bereft of flexible options, due to a system that is too heavily focused on simply achieving better than average rates of return.

The new "guaranteed income for life" products offer peace of mind in a way that more traditional approaches cannot.

Australia led the world when superannuation was introduced in the 1980s. We continue to lead, with the Federal Government recently boosting the super guarantee to 12 per cent. It requires only the briefest glance overseas to realise just how well we have handled our retirement planning.

We also need to recognise that our super industry is a young one, and will continue to evolve to meet the challenges of working and retiring Australians. I am optimistic we can manage the transition smoothly.

John Brumby is chair of MTAA Super and a former premier of Victoria.

View the original article here

New ideas take timing out of super

We need to recognise that our super industry is a young one, and will continue to evolve, writes John Brumby. Source: Supplied

ASK a golfer the secret to a booming drive, a batsman how to hit a big six, or a big AFL forward about marking inside 50 on the siren, and you will hear the same counterintuitive advice again and again: It's not about pure skill, but timing.

We should all take heed of this lesson when it comes to our superannuation.

In 2008, the Global Financial Crisis hammered home the critical importance of timing. Tens of thousands of Australians looking to conclude their working lives suddenly found their super balances decimated and their retirement plans in ruins.

Even those who had invested with super funds with past records of high average net returns found themselves affected by unfortunate timing.

Some of those retiring just after the GFC crash were up to 30 per cent behind those who pulled out just before, despite having near identical balances in 2007.

A 30 per cent difference in total balance can cut the length of time retirement savings will last in half -- from 20 to 10 years.

In industry jargon, such unfortunate timing is known as "sequencing risk".

The waxing and waning of the market over a working life will tend to balance out on average. But if it tanks just before you retire, it can sting far more than if it happens at the beginning of your career.

With four million Australians due to retire in the next decade, sequencing risk has rocketed to the attention of many.

Rather than thinking of super simply as a pot of gold tucked away for "the future", Australians are starting to consider how that pot can be protected.

Unfortunately, this risk is not the only issue facing those in retirement.

No one has a clear idea of how long they will live. Life expectancy, and therefore time spent in retirement, is a great unknown.

A 2011 MetLife Insurance study found that 52 per cent of Australians over 51 were "extremely concerned" about outliving their retirement savings.

The historical response to having inadequate savings to cope with this longevity risk has been to invest more aggressively. But even a well-managed aggressive approach leaves you open to risk.

It is clear that timing is critical. But unless your capacity to read the future is better than mine, you will have no way of accurately predicting if the time you decide to retire is going to correspond with a major market downturn. So what's the answer?

Some funds have started to tailor strategies to individual members and groups of like members, instead of lumping everyone together. But this addresses only part of the solution.

MTAA Super has spent two years working with MetLife Insurance to develop a new approach for industry funds offering a guaranteed income for life, payable as a pension, even if a member's account balance reaches zero. While the annual income can go up or down, the formula is certain, so pensioners can plan their retirement finances around it.

I believe this is a vital evolutionary step for the Australian superannuation system.

In the past, those seeking guaranteed income products havebeen bereft of flexible options, due to a system that is too heavily focused on simply achieving better than average rates of return.

The new "guaranteed income for life" products offer peace of mind in a way that more traditional approaches cannot.

Australia led the world when superannuation was introduced in the 1980s. We continue to lead, with the Federal Government recently boosting the super guarantee to 12 per cent. It requires only the briefest glance overseas to realise just how well we have handled our retirement planning.

We also need to recognise that our super industry is a young one, and will continue to evolve to meet the challenges of working and retiring Australians. I am optimistic we can manage the transition smoothly.

John Brumby is chair of MTAA Super and a former premier of Victoria.

View the original article here

Super hub for people now in doubt

Choice chair Jenni Mack is pushing to establish a ''Superannuation Consumer Centre''. Picture: Stephen Cooper  Source: News Limited

TIGHT-fisted fund managers are jeopardising a bid to give consumers a much-needed voice in the superannuation debate.

A group including former Macquarie Bank CEO Allan Moss and ex Victorian Premier Steve Bracks are behind Choice chair Jenni Mack's push to establish a ''Superannuation Consumer Centre''.

Ms Mack said 34 industry bodies were representing the $1.4 trillion super sector but no-one was standing up for ordinary people.

''All the voices in the current debate are self-interested,'' Ms Mack said.

''Where are the consumers? There is no voice for the beneficiaries of the system.''

Mr Moss said that as well as participating in the public policy debate, a consumer centre could provide online education that explained super and highlighted risks.

''Investors in super are often both confused and fearful,'' Mr Moss said.

''It's very hard for people who haven't had a financial background to suddenly have to start making critical financial decisions in their late 50s or their 60s. I feel for them. It's really hard to understand finance.''

Last year Ms Mack and her backers convinced Federal Financial Services Minister Bill Shorten to commit $10 million over three years towards an investment fund, the earnings of which would bankroll a consumer centre for decades.

But the government contribution was conditional on the super sector kicking in a matching amount.

A chunk of the $10 million is lost if super funds don't start stumping up by June 30.

And so far not a single fund has committed a cent. Research firm Rainmaker has estimated super funds reap about $17 billion a year in fees.

The minimum $10 million commitment to the centre is less than 0.06 per cent of one year's fee revenue.

There have been some positive signs.

Industry fund Australian Super, which manages $60 billion, has flagged support.

A spokeswoman for its CEO Ian Silk said: ''We think that having a Superannuation Consumer Centre that is a purely consumer oriented body that has no agenda other than to act in the interests of consumer fund members . . . is a terrific idea.''

However, Australian Super's financial commitment is in-principle only and depends on its peers chipping in, with each industry fund to make its own decision.

The other side of the super sector - so-called retail funds, typically run by banks and insurers - had been looking to contribute on a ''one in all in'' basis.

But it is understood that this position was abandoned at the most recent board meeting of the Financial Services Council.

The office of FSC CEO John Brogden did not return calls, nor did Mr Shorten's office.

View the original article here

Super hub for people now in doubt

Choice chair Jenni Mack is pushing to establish a ''Superannuation Consumer Centre''. Picture: Stephen Cooper  Source: News Limited

TIGHT-fisted fund managers are jeopardising a bid to give consumers a much-needed voice in the superannuation debate.

A group including former Macquarie Bank CEO Allan Moss and ex Victorian Premier Steve Bracks are behind Choice chair Jenni Mack's push to establish a ''Superannuation Consumer Centre''.

Ms Mack said 34 industry bodies were representing the $1.4 trillion super sector but no-one was standing up for ordinary people.

''All the voices in the current debate are self-interested,'' Ms Mack said.

''Where are the consumers? There is no voice for the beneficiaries of the system.''

Mr Moss said that as well as participating in the public policy debate, a consumer centre could provide online education that explained super and highlighted risks.

''Investors in super are often both confused and fearful,'' Mr Moss said.

''It's very hard for people who haven't had a financial background to suddenly have to start making critical financial decisions in their late 50s or their 60s. I feel for them. It's really hard to understand finance.''

Last year Ms Mack and her backers convinced Federal Financial Services Minister Bill Shorten to commit $10 million over three years towards an investment fund, the earnings of which would bankroll a consumer centre for decades.

But the government contribution was conditional on the super sector kicking in a matching amount.

A chunk of the $10 million is lost if super funds don't start stumping up by June 30.

And so far not a single fund has committed a cent. Research firm Rainmaker has estimated super funds reap about $17 billion a year in fees.

The minimum $10 million commitment to the centre is less than 0.06 per cent of one year's fee revenue.

There have been some positive signs.

Industry fund Australian Super, which manages $60 billion, has flagged support.

A spokeswoman for its CEO Ian Silk said: ''We think that having a Superannuation Consumer Centre that is a purely consumer oriented body that has no agenda other than to act in the interests of consumer fund members . . . is a terrific idea.''

However, Australian Super's financial commitment is in-principle only and depends on its peers chipping in, with each industry fund to make its own decision.

The other side of the super sector - so-called retail funds, typically run by banks and insurers - had been looking to contribute on a ''one in all in'' basis.

But it is understood that this position was abandoned at the most recent board meeting of the Financial Services Council.

The office of FSC CEO John Brogden did not return calls, nor did Mr Shorten's office.

View the original article here

Govt accuses Opposition of $4 billion super raid

THE Government today is accusing the Opposition of a $4 billion "raid on super" as it fights to counter criticism of its own plan to increase taxes on high-end retirement savings.

The offensive will ensure that superannuation, and Labor's bid to put a 15 per cent tax on account earnings over $100,000 a year, will be a central election issue.

The Government is highlighting a separate scheme which started last July to give low income earners a $500 annual tax cut to boost their superannuation savings.

Treasurer Wayne Swan today said the 15 per cent tax would affect 16,000 retirement savers, but rejection of the Low Income Superannuation Contribution (LISC) would hurt 3.6 million - 225 times more people.

"(Opposition Leader)Tony Abbott has spent the last two weeks fuelling rumours about the Government’s superannuation reforms to keep his $4 billion raid on superannuation as secret as he can," said Mr Swan.

But Mr Abbott has dismissed the debate saying the Government will not go ahead with its LISC scheme because it is to be funded by revenue from the mining tax.

"Now, the point I make is that this money is going to go under Labor because the mining tax which funds it hasn't raised any revenues," Mr Abbott said on Sunday.

"No-one should think that this programme is safe under Labor because the money to fund it isn't there.

"This is a government which is so incompetent, it is the first government in Australia's history to put in place a big new tax that raises no money."

The Opposition Leader said the Government did not understand that superannuation money didn't belong to them, and that the savings should not be fiddled with.

"They shouldn't tamper with it, they shouldn't be changing the rules in adverse ways and the commitment that I give is that there will be no unexpected adverse changes to superannuation under a Coalition government," Mr Abbott told reporters in Sydney.

The Government wants to shift the focus of the superannuation debate onto the Coalition's pledge to reject the Low Income Superannuation Contribution and highlight Mr Abbott's defence of high-earning account holders with $2 million whose proceeds are not taxed at all.

"He says we’re raiding super when we make modest changes that will affect 16,000 of the most wealthy Australians. By his own test, what’s Tony Abbott doing if he goes after the super savings of 3.6 million, as he said he will do?" said Mr Swan.

"Tony Abbott’s superannuation raid hits 225 times as many people as the reforms the Government announced on Friday.

"He needs to be held to account for this - Australians deserve to know that Tony Abbott’s election policy on superannuation is to attack the superannuation savings of 3.6 million workers.”

View the original article here

Govt accuses Opposition of $4 billion super raid

THE Government today is accusing the Opposition of a $4 billion "raid on super" as it fights to counter criticism of its own plan to increase taxes on high-end retirement savings.

The offensive will ensure that superannuation, and Labor's bid to put a 15 per cent tax on account earnings over $100,000 a year, will be a central election issue.

The Government is highlighting a separate scheme which started last July to give low income earners a $500 annual tax cut to boost their superannuation savings.

Treasurer Wayne Swan today said the 15 per cent tax would affect 16,000 retirement savers, but rejection of the Low Income Superannuation Contribution (LISC) would hurt 3.6 million - 225 times more people.

"(Opposition Leader)Tony Abbott has spent the last two weeks fuelling rumours about the Government’s superannuation reforms to keep his $4 billion raid on superannuation as secret as he can," said Mr Swan.

But Mr Abbott has dismissed the debate saying the Government will not go ahead with its LISC scheme because it is to be funded by revenue from the mining tax.

"Now, the point I make is that this money is going to go under Labor because the mining tax which funds it hasn't raised any revenues," Mr Abbott said on Sunday.

"No-one should think that this programme is safe under Labor because the money to fund it isn't there.

"This is a government which is so incompetent, it is the first government in Australia's history to put in place a big new tax that raises no money."

The Opposition Leader said the Government did not understand that superannuation money didn't belong to them, and that the savings should not be fiddled with.

"They shouldn't tamper with it, they shouldn't be changing the rules in adverse ways and the commitment that I give is that there will be no unexpected adverse changes to superannuation under a Coalition government," Mr Abbott told reporters in Sydney.

The Government wants to shift the focus of the superannuation debate onto the Coalition's pledge to reject the Low Income Superannuation Contribution and highlight Mr Abbott's defence of high-earning account holders with $2 million whose proceeds are not taxed at all.

"He says we’re raiding super when we make modest changes that will affect 16,000 of the most wealthy Australians. By his own test, what’s Tony Abbott doing if he goes after the super savings of 3.6 million, as he said he will do?" said Mr Swan.

"Tony Abbott’s superannuation raid hits 225 times as many people as the reforms the Government announced on Friday.

"He needs to be held to account for this - Australians deserve to know that Tony Abbott’s election policy on superannuation is to attack the superannuation savings of 3.6 million workers.”

View the original article here

Govt accuses Opposition of $4 billion super raid

THE Government today is accusing the Opposition of a $4 billion "raid on super" as it fights to counter criticism of its own plan to increase taxes on high-end retirement savings.

The offensive will ensure that superannuation, and Labor's bid to put a 15 per cent tax on account earnings over $100,000 a year, will be a central election issue.

The Government is highlighting a separate scheme which started last July to give low income earners a $500 annual tax cut to boost their superannuation savings.

Treasurer Wayne Swan today said the 15 per cent tax would affect 16,000 retirement savers, but rejection of the Low Income Superannuation Contribution (LISC) would hurt 3.6 million - 225 times more people.

"(Opposition Leader)Tony Abbott has spent the last two weeks fuelling rumours about the Government’s superannuation reforms to keep his $4 billion raid on superannuation as secret as he can," said Mr Swan.

But Mr Abbott has dismissed the debate saying the Government will not go ahead with its LISC scheme because it is to be funded by revenue from the mining tax.

"Now, the point I make is that this money is going to go under Labor because the mining tax which funds it hasn't raised any revenues," Mr Abbott said on Sunday.

"No-one should think that this programme is safe under Labor because the money to fund it isn't there.

"This is a government which is so incompetent, it is the first government in Australia's history to put in place a big new tax that raises no money."

The Opposition Leader said the Government did not understand that superannuation money didn't belong to them, and that the savings should not be fiddled with.

"They shouldn't tamper with it, they shouldn't be changing the rules in adverse ways and the commitment that I give is that there will be no unexpected adverse changes to superannuation under a Coalition government," Mr Abbott told reporters in Sydney.

The Government wants to shift the focus of the superannuation debate onto the Coalition's pledge to reject the Low Income Superannuation Contribution and highlight Mr Abbott's defence of high-earning account holders with $2 million whose proceeds are not taxed at all.

"He says we’re raiding super when we make modest changes that will affect 16,000 of the most wealthy Australians. By his own test, what’s Tony Abbott doing if he goes after the super savings of 3.6 million, as he said he will do?" said Mr Swan.

"Tony Abbott’s superannuation raid hits 225 times as many people as the reforms the Government announced on Friday.

"He needs to be held to account for this - Australians deserve to know that Tony Abbott’s election policy on superannuation is to attack the superannuation savings of 3.6 million workers.”

View the original article here

Tax on super over $100K a year

SUPERANNUATION earnings over $100,000 a year will be taxed under plans unveiled by Labor today.

Superannuation Minister Bill Shorten and Treasurer Wayne Swan made the announcement this morning. Watch it live above.

"We want to make it better, we want to make it fairer and we want to make it stronger," Mr Swan said of the superannuation system.

Under a wide-range of reforms announced today - which will pump $900 million of revenue back into the budget over the forward estimates - the design and administration of the higher concessional contributions cap will also be simplified.

Income streams over $100,000 will be taxed at a concessional rate of 15 per cent under the changes.

Get the latest breaking news, views and add your opinion here.

Mr Swan said there was "something wrong" with the system that everyday working Australians weren't getting the best deal from superannuation.

Mr Shorten said "we want to take superannuation above politics".

"We believe the system should be targeted at everyday earning Australians," he said.

"We all know that concessions can't be open ended.

"Once you've achieved a comfortable level in retirement savings, you probably don't need as much as those who haven't gotten to that point."

He said the changes "were not retrospective".

"Vigilance dictates that we must make these hard changes," Mr Shorten said.

He said any savings up to $100,000 would remain tax free.

The changes will come into place from July 1, 2014.

Click on this link for the full announcement details.

Mr Shorten said the changes would also apply to parliamentarians.

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

A special Council of Superannuation Custodians will be established to ensure any future changes to the sector are consistent with the agreed Charter of Superannuation Adequacy and Sustainability. 

Share the anguish of columnist Joe Hildebrand, who painstakingly avoided talking about superannuation... until now.

Mr Shorten said the changes would continue "our unbeaten legacy" on superannuation.

Mr Swan said the changes were aimed to "clip at the top".

"We are approaching this task not from the viewpoint of the forward estimates of the budget but for the longer term," he said.

Mr Shorten said the government wasn't "specifically targeting" self-managed super funds.

Mr Swan said much of the speculation on superannuation over recent weeks had been wrong.

He said the cabinet had met last night to discussed the reforms.

"We've concluded by and large our discussions in this area," Mr Swan said.

Mr Shorten called on the Coalition to drop it's plans to re-introduce taxes on super contributions for the lowest earning Australians.

Mr Shorten said he expected "cries of outrage" from the wealthy over the reforms.

"There is a day of reckoning here," he said.

Mr Swan and Mr Shorten could not guarantee the proposals today would be put to parliament before the September election.

"We will do what we can in the time available before the next election," Mr Shorten said.

Mr Shorten brushed off calls from the Industry Super Network today who urged the government to make no changes to superannuation before the election.

"I would be interested to see what they say now in the light of this announcement," Mr Shorten said.

Asked if the changes would help fund the Gonski education reforms and the National Disability Insurance Scheme Mr Swan said it was one of many savings that would help bring back revenue.

"You do create room in the longer term for policy proposals," Mr Swan said.

"There is no magic wand or one area of savings that will instantly change the fact that revenues have come off dramatically."

Speculation over the government’s planned raid on superannuation hit fever pitch this week.

The reforms were due to be part of next month’s federal budget.

View the original article here

Tax on super earnings over $100K

LABOR will raid Australia's superannuation accounts to plug its revenue hole, with earnings over $100,000 to be taxed under a plan unveiled today.

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

Superannuation Minister Bill Shorten and Treasurer Wayne Swan this morning revealed Labor would cap the exemption for earnings on superannuation assets supporting income streams at $100,000 with a concessional tax rate of 15 per cent to apply after that. 

Tony Abbott immediately hit out at the planned reforms describing them as “another broken promise” that would result in less money in the pockets of Australians.

The changes would affect individuals with around $2 million of savings in superannuation and will take effect from July 1 next year.

"We want to make it better, we want to make it fairer and we want to make it stronger," Mr Swan said of the superannuation system.

The measures -- which will also hit politicians -- will bring in around $900 million in savings for the federal budget over the forward estimates.

Mr Swan said there was "something wrong" with the system that everyday working Australians weren't getting the best deal from superannuation.

Mr Shorten said "we want to take superannuation above politics".

"We believe the system should be targeted at everyday earning Australians," he said.

Deputy Prime Minister and Treasurer, Wayne Swan and Minister for Financial Services and Superannuation Bill Shorten holding a press conference at Parliament House in Canberra. Picture: Smith Kym

"We all know that concessions can't be open ended.

"Once you've achieved a comfortable level in retirement savings, you probably don't need as much as those who haven't gotten to that point."

He said the changes "were not retrospective".

"Vigilance dictates that we must make these hard changes," Mr Shorten said.

Click on this link for the full announcement details.

People aged 50 and over will also get a boost to the tax free additional contributions they can make from $25,000 to $35,000.

However the measures may not even go to the parliament before the next election.

“We will do what we can in the time available before the next election," Mr Shorten said.

Tony Abbott today said the new measures were“yet another hit on Australian people”.

Share the anguish of columnist Joe Hildebrand, who painstakingly avoided talking about superannuation... until now.

The Opposition Leader said people would ultimately have less money as a result of the flagged changes.

“This is a government that is incompetent and untrustworthy,” Mr Abbott said.

“This is a government which is prepared to tax the people to fund own spending.”

He said if re-elected there was no guarantee Labor would stop at the measures announced.

“If they get three more years they will go further – it wont stop here,” Mr Abbott said, maintaining there would be no adverse, unexpected changes to superannuation under a first term of a Coalition government.

Under current arrangements on superannuation, all earnings on assets supporting income streams are tax free in contrast to earnings in the accumulation phase of superannuation which are taxed at 15 per cent.

As part of other changes today Labor will also establish a special Council of Superannuation Custodians to ensure any future changes to the sector are consistent with the agreed Charter of Superannuation Adequacy and Sustainability.

It will work to simplify the design and administration of the higher concessional contributions cap, reform the treatment of concessional contributions in excess of the annual cap, extend normal deeming rules to superannuation account-based income streams, extend concessional tax treatment to deffered lifetime annuities and further reform the arrangements for lost superannuation.

Asked if the changes would help fund the Gonski education reforms and the National Disability Insurance Scheme Mr Swan said it was one of many savings that would help bring back revenue.

"You do create room in the longer term for policy proposals," Mr Swan said.

"There is no magic wand or one area of savings that will instantly change the fact that revenues have come off dramatically."

Speculation over the government’s planned raid on superannuation hit fever pitch this week.

The reforms were due to be part of next month’s federal budget.

The Association of Superannuation Funds of Australia today welcomed the government’s announcement.

The organisation’s CEO Pauline Vamos said it would help stop the panic in the community and allow people to better plan for their retirement in an environment of stability and certainty.

"We have been calling on the government to put a stop to the hysteria and consider policies which take a long-term approach to the future sustainability of Australia's superannuation system,” Ms Vamos said.

She said there was a lot of complexity in the changes which needed to be considered carefully.

“We will examine these proposed changes in detail to ensure they deliver the best outcomes for the sustainability of the system and a comfortable retirement for all Australians."

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Coalition commits to Labor's super deal

One of the key agitators in Labor's leadership fiasco said he won't vote for raids on superannuation.

Penny Wong has refused to comment on 'gossip' about the government's budget plans for superannuation.

Andrew Main asks Clime Investment Management’s John Abernethy how superannuation will go and what the Australian dollar will do in 2013.

Shadow Treasurer Joe Hockey. Source: The Australian

THE Coalition says it will maintain Labor's commitment to boost employer superannuation contributions as the Gillard government continued to fuel speculation it would raid the sector in the May Budget.

Opposition treasury spokesman Joe Hockey yesterday said an Abbott-led government would keep in place Labor changes to the compulsory employer superannuation contribution from 9 to 12 per cent.

"We have already stated that we are going to continue with that programme to increase it to 12 per cent," Mr Hockey said.

"That is the only initiative out of the mining tax that we have committed to. So, nothing has changed."

The boost is due to start this year on July 1 and will increase a quarter of a per cent in 2012/13 and 2013/14.

It will then jump half a per cent every year until 2020.Julia Gillard again yesterday brushed off speculation her government was planning a hit to superannuation contributions and earnings of the wealthy in the May 14 budget.

"I can tell you with a lot of certainty what we will do. We will increase superannuation from 9 to 12 per cent for working Australians to give them a decent retirement income," Ms Gillard said.

"What you can always do is trust Labor with superannuation. It wouldn't be in this country if we hadn't brought it here."

Ms Gillard said the Coalition if elected would rip money from lower paid Australians under their plan to reintroduce the 15 per cent tax on superannuation for 3.6 million Australians earning $37,000 and under.

"That's one in three workers facing a superannuation cut," she said.

Labor MPs added fuel to the speculation yesterday with Cabinet minister Craig Emerson saying the government's fiscal position needed to be protected.

"Where there are tax concessions that are going to damage the fiscal position of the government of the day of course we need to look at that," Dr Emerson told ABC radio.

"It is the task of every government to make sure the budget is not only sustainable in the short term but also the long term."

Assistant Treasurer David Bradbury would not rule out his party would raid super, despite being asked repeatedly on the matter.

"The minute we start ruling things out we move onto the next thing," Mr Bradbury told Sky News.

Speculation over the budget move follows a call from Treasury secretary Martin Parkinson last year that superannuation tax concessions needed to be changed in order to preserve the tax revenue base as the population ages.

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PM makes no promises on your super

Julia Gillard cannot make a commitment to leaving our superannuation untouched. Picture: Colin Murty Source: News Limited

• Penny Wong brushes off Budget speculation
• Liberals say Labor ''desperate to find revenue'' 
• PM to leave Aussies in loads of debt 

JULIA Gillard has failed to rule out if Labor will raid superannuation funds in the May budget, saying any decisions made for the sector will be in Australia's long term interest.

It comes after Tony Abbott declared the Coalition will make ''no adverse unexpected changes'' to superannuation in its first term of government.

Asked directly if superannuation funds would be used to supplement the tax revenue base, Ms Gillard would not give a clear answer.

''Any decisions we make will be about the long term interest of the superannuation system,'' Ms Gillard told ABC radio.

''When we think about superannuation we think about what is in the interest of decent working people … and what is in the interest of the long term sustainability of the system.''

She said superannuation had been brought in by Labor and it would always be a ''Labor creature''.

''I can assure people superannuation is a Labor creature and we will always nurture it well,'' Ms Gillard said. 
 

Tony Abbott, visiting BAE Systems Australia in Melbourne today, has vowed to leave our super untouched. Picture: Ian Currie

Earlier today, Mr Abbott said there had been ''far too much fiddling'' with superannuation from Labor and if elected as Prime Minister on September 14 he would put a stop to it.

''There have been at least five significant changes to superannuation from this government,'' Mr Abbott said.

''I want to say to people that super is safe under the Coalition.

''We will make no adverse unexpected changes to superannuation in our first term.''

The Liberal party has previously confirmed it is their policy to reintroduce the 15 per cent tax on superannuation for 3.6 million Australians earning $37,000 and under, which was cut by Labor.

It could mean a tax slug of up to $500 per year for one in three Australian workers under an Abbott government.
 

Senator Penny Wong has brushed off speculation higher income earners would have their superannuation contributions and earnings slugged.

Meanwhile Kevin Rudd backer Joel Fitzgibbon - who resigned from his role as chief government whip last week, said he believed superannuation for higher income earners needed to be looked at in the context of finding savings in the budget.

But he said he would ''not support'' any changes that adversely impacted ordinary people.

''I don’t mind us having a look at the very top end but I will not support, will not support, changes that affect ordinary people,'' Mr Fitzgibbon told the Breaking Politics program.

''For example, coal miners in my electorate earning, you know, 100, 120, 130, $140,000 a year are not wealthy – that’s the sort of money you need these days with property prices etc as they are.

''In Sydney’s west you can be on a quarter of a million dollars family income a year and you’re still struggling, particularly given property prices again.''

The comments come as Finance Minister Penny Wong this morning attempted to brush off speculation superannuation would face the budget razor on May 14 in line with Treasury’s stance raiding funds would help sustain the tax revenue base as the population ages.

Senator Wong called for calm over the issue and said Labor was the only party committed to ''building on superannuation''.

''I don’t get into hypotheticals and I don’t get into any gossip about what might and might not have been discussed in the Cabinet committee,'' Senator Wong told Sky News.

''What I would say to people is don’t believe everything you read. Budget speculation is always abounds at this time and I would say to people look at our record and look at support for superannuation.''

Liberal MP Jamie Briggs said Labor was ''desperate to find revenue to plug their ever increasing budget deficits''.

''It is a farce and it’s little wonder the Australian people are over this government,'' Mr Briggs told Sky News.

Treasury Secretary Martin Parkinson last year urged the government to cut superannuation tax concessions in the May 14 budget in order to secure its revenue base as the population ages.

''With the Commonwealth budget coming under increasing pressure over the next few decades, the fiscal sustainability of all policies, including superannuation, will demand greater public scrutiny,'' Dr Parkinson told an Association of Superannuation Funds of Australia conference.

On Tuesday Julia Gillard said while Labor would ''safeguard superannuation'', revenue also needed to be sustainable.

''We've always got to make sure that the system is sustainable and is meeting the nation's needs and the needs of individuals,'' she said.

The stoush over superannuation comes as News Limited revealed today that government debt levels were forecast to blow out by 80 per cent to $165 billion, equal to $14,000 for every Australian.

Analysis of Budget documents revealed that between the 2010 election and Federal Treasury's update in October last year, the 2012-13 net debt estimate rose $54 billion to $144 billion.

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Super timing is a trap

Unfortunate timing can badly crack your nest egg. Source: National Features

IF YOU have seen, or been, a grumpy retiree in the past five years, it's understandable.

Trying to time the market may be a potential trap for investors generally, but market timing becomes vital for those preparing for retirement. And for recent retirees the timing was a shocker, thanks to the global financial crisis literally wiping out their life's superannuation savings and then some.

Michael Drew, professor of finance at Griffith University, says the sequence of investment returns can severely impact how much people have at retirement."If you have a 25 per cent fall in markets in the past five years of your working life, that's equivalent to about 1 1/2 times your lifetime contributions to superannuation," Prof Drew told a FINSIA superannuation briefing this month.

For the record, Aussie shares a cornerstone of many investment portfolios last decade sunk more than 50 per cent during the GFC.

"Surely we can do something better than serve up astrological risk: Do the planets align around your retirement date?" says Prof Drew. "How can we have the same asset allocation for everybody?"

Some super funds are taking notice, changing the asset mix for older members who are in their fund's default option.

The message for everybody else is to keep a closer eye on super and investments as retirement approaches, and perhaps decide to beef up their conservative assets such as cash and fixed interest earlier, even if it means missing potential gains from growth assets such as shares and property.

Everyone must make their own decision based on their tolerance to risk, what they want from retirement, and their level of potential grumpiness.

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Abbott promises better deal for military super

Source: Herald Sun

OPPOSITION Leader Tony Abbott has committed to bringing the indexation of superannuation payments for some current and former defence personnel into line with old age pensions.

It would apply to 57,000 military superannuants and cost $98 million over four years, under the Defence Forces Retirement Benefit (DFRB) and the Defence Force Retirement and Death Benefit (DFRDB).

The Labor Government has previously said such a change would cost $175 million.

But Mr Abbott said the policy was fully costed and fully funded, and would be introduced for recipients aged 55 and over if the coalition won the September 14 federal election.

He signed a pledge promising to deliver on the commitment from the first coalition budget.

"I am making you a promise that we will keep, that we will appropriately index the DFRDB and the DFRB," he said today. "They will be appropriately indexed and it will happen in our first budget."

A change in the indexation of the benefits has long been sought by ex-services groups.

It has been previously promised and not delivered by both former coalition and Labor governments.

The DFRB and DFRDB schemes are defined benefit schemes.

They currently pay a percentage of the final wage as a pension, indexed twice yearly according to the consumer price index (CPI).

Under the coalition proposal, payments would be indexed to the higher of increases in the CPI, male total average weekly earnings (MTAWE) or pensioner and beneficiary living cost index (PBCLI).

This would bring them into line with how the aged and other welfare pensions are indexed.

The DFRB scheme closed in 1972 and the DFRDB in 1991.

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$1m in super may not be enough

Superannuation delays are annoying fund members. Source: Supplied

ANY Federal Government move on superannuation risks setting the retirement system up for failure, national accounting firm Chan & Naylor warns.

Superannuation is again on the political agenda amid ongoing speculation the Labor Government could again rejig superannuation tax concessions, particularly for high earners, in the May Budget.

While Prime Minister Julia Gillard has ruled out tax changes on withdrawals by those with higher balances, the Government has so far declined to respond to other concerns.

Chan & Naylor director Ken Raiss says those holding $1 million in retirement savings are under the spotlight.

"During recent weeks of political tax-grab barracking, the government has successfully managed to stigmatise Australian retirees who have managed to set aside their own monies for independent retirement," he said today.

At the same time, the Government risked eroding confidence in superannuation.

While $1 million was a considerable sum in today's terms, once medical and aged care costs are factored in it could be inadequate.

Chan & Naylor forecasts a $1 million pension fund in today's money will need to be at least $2.5 million in 30 years time.

"In simple terms, Australians are going to need more retirement income and the government of the day is doing surprisingly little to help," Mr Raiss said.

Meanwhile, a survey by human resources consultants Aon Hewitt shows 58 per cent of businesses are still to determine how they will respond to increases in the superannuation guarantee for low paid workers.

The guarantee will initially rise to 9.25 per cent, from nine per cent, from July 1 this year. It will then continue to increase incrementally to 12 per cent by 2019/20.

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Super Thursday not super after all

Source: The Australian

THE profit season's biggest reporting day - Super Thursday - turned into the worst day on the stock market in almost nine months with about $35 billion wiped off the value of corporate Australia.

Concerns about the US outlook, a squeeze on global liquidity, slowing profit growth among Australian companies and the axing of around 1700 jobs sent investors running for cover yesterday.

And the market crashed back below the 5000 point threshold that was passed with much fanfare only a week ago.

Investors were initially spooked by comments overnight from the US Federal Reserve that it would review its stimulus program next month.

It was the huge surge in global liquidity that was the key driving force behind the return of the bull market with stocks up 20 per cent from its previous lows.

The Australian stock market last month registered the second biggest monthly gains in January since 1994.

But analysts said the good news for concerned mum and dad investors, who have recently returned to the equity market, is that over the past 30 years, when the market does well in January, it finishes the year in positive territory 70 per cent of the time.

Traders however warned the pullback was "just what a lot of people have been waiting for" as many people felt the recent run was a bit too much.

IG Markets strategist Stan Shamu said there was "no real bounce" in markets with short sellers to the fore.

Reporting half-year results, ASX chief executive Elmer Funke Kupper was upbeat that the greater level of stability is making the global economic recovery become possible.

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Super funds grab a third of your savings

On average Australians pay $2000 in super fund fees per year. Picture: File Source: Supplied

SUPERANNUATION fund fees grab up to a third of your savings over your working life, new analysis shows.

On average Australians pay $2000 in fees per year, research commissioned by ING Direct has found.

The analysis, conducted by Rainmaker, shows that depending on your fund, worst case scenario means the superannuation fees will eat away one third of your savings, but in the best case scenario fees will still take one fifth of your money over your career.

A person who commences work aged 20 on a starting salary of $25,000 is likely to accumulate between $502,000 and $663,000 depending on the fee structure of their super fund, the research found.

But they are expected to pay between $118,000 and $174,000 in total fees.

ING DIRECT head of superannuation Michael Christofides said Australians were getting ripped off by fees that are unnecessarily big.

"Many super funds charging an exorbitant amount," Mr Christofides said.

"Unfortunately many Australians don’t take enough of an interest in their super - most people don't know what their balance is – and a lot of people don't know how much fees they pay."

Once you retire, super fund fees get exponentially higher, because your super balance increases over your career.

ING Direct found over 65s are slugged the highest in fees, paying $6130 a year on average.

People under 35 pay an average annual fee of $445, a figure that jumps up to $1239 for people aged 35-49, $3262 for people aged 50-59 and $3682 for people aged 60-65.

The analysis found that someone who retires with $500,000 would pay up to one fifth of their cumulative benefits in fees over the 35 years their super is expected to last.

Over the 35 years the member will receive an estimated $1.2 million in cumulative benefit payments, but they will pay an estimated $230,000 in cumulative fees which is equivalent to 19 per cent of their cumulative benefits.

These retirement cumulative fees are almost twice the total fees during the pre-retirement accumulation phase.

Association of Superannuation Funds of Australia CEO Pauline Vamos said: "Research published by the consultancy Rice Warner indicates that there are a large number of superannuation funds open to the public with fees which are both well below 1 per cent of assets and the average fee estimates used in the ING analysis.

"ASFA encourages individuals to actively engage with their superannuation and to choose the superannuation fund and investment option that delivers the best value for them in terms of prospective investment returns, services, advice and net fees."

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Earning more super, but giving more away

Source: The Australian

AUSTRALIANS' super balances are back on the march upwards, but experts say workers are being ripped off in spending around $20 billion last year on fees.

ING research shows the average Australian spent close to $2000 on fees last year, while some older Australians are paying as much as $6000.

But the latest SuperRatings survey for January shows super funds got off to a flying start in 2013, registering their 12th monthly gain in the past 13 months.

The average median growth fund rose 2.6 per cent in January, putting the sector on track for a fourth consecutive positive financial year return.

The sharemarket rally has seen the total gain for the seven months since 1 July 2012 jump to almost 11 per cent.

The data also shows industry super funds have delivered slightly stronger long term returns over 3-10 year periods than most of their retail competitors.

Over the past five-year period industry funds have on average delivered an annual return of 2.8 per cent compared with 2.1 per cent for retail fund, according to ChantWest

But ING Direct's head of superannuation Michael Christofides said workers are often paying far more in fees than they think to both retail and industry funds.

"Too many Australians are getting ripped-off when it comes to fees they're paying for superannuation," he said.

"Consumers have the right to be frustrated at paying such large fees, particularly when the research shows there is no correlation between fees and performance."

The research shows most workers pay on average 1.26 per cent of their annual inflows in fees - but with some personal funds that can run to over 2c in every dollar lodged.

For someone who started work at 20 and retires at 67 years this could run to as much as $174,000 in super fees.

Financial services researcher Canstar warns says the high fees may put a major dent in some people's retirement income goals.

"Small differences in fees can have a large cumulative effect. Don't underestimate the effect fees have on your ultimate balance when looking for a superannuation fund," Canstar research manager Chris Goth said.

This comes as the banking industry joins the chorus of financial institutions calling on the Gillard government not to tinker with the superannuation system in this year's federal budget.

Australian Bankers' Association chief executive Steven Munchenberg says many bank customers are concerned that the government will increase the level of tax on super savings.

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Abbott super cuts 'hit women hardest'

Tony Abbott with wife Margie at a campaign rally. The Opposition Leader has worked at improving his image with female voters, but many of those will lose money under his super cuts. Picture: Nikki Short Source: News Limited

Julia Gillard is reaching out to blue collar workers with a billion dollar package to protect local manufacturing jobs

Tony Abbott with wife Margie at a campaign rally. The Opposition Leader has worked at improving his image with female voters, but many of those will lose money under his super cuts. Picture: Nikki Short Source: News Limited

A KEY Coalition savings measure to axe the $500 superannuation benefit for low-income workers will hit more than two million women, including 11,000 female voters in Tony Abbott's own electorate.

As a Galaxy poll shows 62 per cent of women harbour concerns over the Opposition leader, Australia's peak welfare body and Labor are targeting Mr Abbott over the $800 million savings measure.

The Coalition plans to scrap the $500 co-contribution for workers earning less than $37,000, a move that will affect thousands of women in some of the country's most marginal seats.

In western Sydney, around 25,000 women will lose the benefit in the Labor-held seats of Lindsay and Greenway, while nearly 13,000 low-paid women in the Victorian regional seat of Corangamite, held by Labor's Darren Cheesman, will also miss out.

Brisbane, one of the Liberals' most marginal electorates, also has a high number of working women, around 15,000, who stand to lose the $500 payment.

The Gillard Government hopes that Mr Abbott's negative standing with many women will allow it to "sandbag" crucial marginal seats at the September 14 poll.

Around 60 per cent, or 2.1 million, of the 3.6 million workers hit by the Coalition super policy are women, and female workers generally hold around 50 per cent of the total super savings held by men.

Treasurer Wayne Swan slammed the Coalition's "raid" on low and middle income superannuation.

"I've rarely seen such a nasty policy, ripping up to $500 a year from the superannuation accounts of one in every three workers," Mr Swan said.

"It says a lot about Tony Abbotts view of the world that he thinks hard working women should be hit hardest to fill his $70 billion budget crater."

Status of Women Minister Julie Collins, said that "winding back the superannuation benefits of low-income workers will hit women the hardest".

"Two thirds of these workers are women," she said.

"On top of that, the average superannuation balance for Australian women is already 40 per cent below that of men and average payouts are almost half that of men."

Richard Dennis, head of the Canberra-based Australia Institute, warned the Opposition leader that his status with female voters would suffer.

"You would think that in an election year where Tony Abbott needs to show women voters that he's serious about representing their interests, that he would have thought more deeply about the consequences of such a big change," he said.

The Australian Council of Social Services, which has been lobbying the Gillard Government to make super fairer for low income workers, called on Mr Abbott to "rethink" the savings measure.

ACOSS chief executive Cassandra Goldie said: "We know that women are clearly more vulnerable to hardship and poverty in later life because they have much less overall savings. The recent introduction of the Government Contribution will make a significant difference in the gender disparity of retirement savings, ensuring that people on low incomes are now at least not penalised by paying more tax on their super than they would ordinarily pay."

The Coalition's superannuation spokesman, Mathias Cormann, said Labor could not be trusted on superannuation and predicted it would be "forced to scrap the low income super tax offset because they can't afford it".

"That's because they've linked that promise to their failed mining tax, which hasn't raised any meaningful revenue," he said.

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