The ugly economics of Swan's super slug

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Swan, Wong and the whole Labor government have never cared about what is in the national interest. All they ever cared about was getting into power. All they have ever done is mess up one thing after another. This will be yet another in a long list of stupid mistakes.

It is all because they have spent billions of dollars they don't have on things we don't need. Now they see a pile of cash in the form of our super savings and decide to raid that in a futile attempt to make up for their own incompetence.

Agreed.
Irrespective of the amount you personally think you need to retire on - the point is that people can at least aim to maintain a lifestyle that they have during working life.
It is not up to the government to come in and quash peoples aspirations to achieve this.

The class warfare debate misses the point. The point being that the govt/treasury can't do their jobs properly. This debate wouldn't even be happening if they had of.
If you think forecasting is difficult - perhaps then you should consider that personal taxes - especially consumption taxes provide a much more stable foundation to forecast on.
During slowdowns, companies go broke, people become unemployed but they still need to spend.

Instead the govt pushes towards taxation on the most volatile asset class out there - commodities, spend it and then wonders why it might be 4bn short.
They also ignored the advice from Telstra when drafting NBN timelines of underestimation. Last I heard the 10 year NBN is on track to deliver in 25 years.

Let the mistake be registered with the govt and not those who trying to provide for their retirement.

Why is it that labour come up with great new ideas, almost on a weekly basis that all need to be funded eg Gonski, Disability insurance etc. Rather than tackling the funding issue by asking "What are we going to cut out, in order to fund this week's great new initiative, they either reach into the tax payers pocket (or super fund) or run a bigger deficit, thereby stealing from the next generation who have to service the debt. It should be law that governments (especially labor) should not be allowed to run deficits - they can't be trusted with the public purse.

"All they have ever done is mess up one thing after another. "
Do you even read what's on this site. Whinge all you like, but the economic facts are clear.

http://www.businessspectator.com.au/article/2013/3/22/federal-budget/eno...
Prime Minister Julia Gillard woke up this morning with the knowledge that Australia’s annual GDP growth is 3.1 per cent, inflation is 2.2 per cent, the unemployment rate is 5.4 per cent, mortgage interest rates are at 6.4 per cent and over 190,000 jobs have been created over the past year.

Gillard can check with the three major credit rating agencies and see that they all have Australia triple-A based on some of the best fiscal settings in the world. Government debt remains at trivial levels and the recent cuts to government spending is seeing a sharp improvement in the budget balance, as it should when the economy is growing.

The prime minister also knows that real wages have risen in each and every year of the past decade and that the stock market is up 25 per cent from the lows of 2012, both factors boosting wealth and making a mockery of most claims of cost of living pressures. Australians have never been richer.

These macroeconomic statistics are just about impossible to beat. It is not clear whether there is a country in the world that can boast these fundamentals.

Your comment is off topic - it seems to have nothing to do with super - but seeing as though you mentioned it.

Government policy has 5 to 10 year lag time - longer in some cases eg. super. So all your claiming is that 5 to 10 years ago we had a good government.

I use to live in the UK where they use to quote exactly the same stuff in 2006 - and look where 10 years of social policy got them. A banking crisis may have had something to do with it - but so does a big government sector which now consumes 50 percent of every pound generated. Imagine how that affects your ability to get out of trouble.

At the end of the day - when you continually pursue left only policies and never any growth policies (none I can think of in the last 3 years) - what you end up with:
*A divided community - over 50 percent of Australia are pro growth - Howard was elected for 10 years
*Fewer growth prospects in the future

I would venture that economic conditions in Australia are what they are not because of anything this Government has done, but as a result previous reforms and no small amount of luck in the form of a 10 year boom on commodity prices. Pink batts and new taxes have added nothing to the productive capacity of this country.

Correct, it is the private sector that provides Australia's economic growth, not the government. The Australian economy appears to be travelling OK in spite of the government policy, certainly not because of it.

If everyone is doing so well, the ATO income from tax should have been higher and there is no need to raise tax and/or remove the concession on superannuation funds.

Yes, Super should be treated with more respect by the Labor party, but disagree that you need 1.5 to 2 million in super ( as a single) to retire on.
1. Who wants to fully retire anyhow? I hope to keep earning ( a small income) until the day I die. Ebay is a fantastic way for people to keep up a small income stream, and its not restricted by age.
2. If you had 1.5 million in super, what would your total assets be?
3. Why should the super you need, include the estate that you hope to pass on to the next generation?
4. Most people are never more wealthy, than at the time of death.

The super nest can be raided by government to save itself. The idea that a smaller government is possible is not possible. We are constantly bombarded with yet more regulations and regulators. The general standard of neural activity in Labor politicians heads is falling off a cliff along with their electoral standing. The good news is that the Labor Party may cease to effectively exist after the next election. It will take 20 years to recover but it will take longer to pay down their legacy and remove their mates from the public teat.

Two comments -

(1) While many retirees will have less than the required amount in super to retire comfortably on - you also miss that many will also have savings tied up in their homes.

(2) How many pitchforks marching on parliament house does it take to change a politician's way over the top generous retirement scheme?

(answer) - probably way too many :)

Whilst the constant tinkering with superannuation legislation does nothing but create uncertainty and mistrust in investors' minds, I disagree with Robert on a number of fronts:
1. it is not generally accepted that one needs $1.5 to $2m for a comfortable retirement at all - where do these figures come from?
2. super is not the only asset one uses to generate retirement income - direct investments combined with superannuation/pensions provide income for many retirees
3. Using an SMSF for pension income is not necessarily more beneficial from a Centrelink pension point of view than using a retail pension product - they are treated the same way.

Age Pension thresholds should be reviewed as part of a comprehensive review of retirement funding - since when did $1m assets (home excluded) mean that you needed government assistance - the upper threshold is far too generous.

The reasson more pensions are used in SMSF is that the average age of SMSF members are higher than the average age of the broader superannuation fund membership.

This will be Labors next big stuff up. These clowns are incomprehensible in their socialist ideals. Looking forward to the Bills being withdrawn form parliament without cross bench support.

Good on you Robert for keeping the ball rolling on super.It seems many are unhappy with the different standards applied too us and them(politicians).Politicians when they leave parliament
these days all get good jobs in advising roles or spruiking,so the day's of them not finding a job after poilitics are gone.They are not like the rest of us that get thrown on the scapheap at 50.
This could be a massive coup started right here on Business Spectator.Fair is fair for all.
Keep the pressure up and perhaps put up a link to a vote among your readers.I say the results will be over 90% in favor of removing the perks.
As a business owner it is easier to lead when we are all in the same bed.

Hello Rodney - I am favourable to a more active role of Business Spectator not just spectating but also prompting government. They had some good changes recently: larger box for comments and also the comments go on right away (removing what I felt was a left leaning inclination to not post certain comments). One change they could have from here: letting readers vote "likes" for certain posts.

I agree with you that the politicians should be on the same super system as the rest of us. In the past year they gave themselves a massive pay rise to a pay level with a built in assumption that they are performing well. Gillard is making more than Obama - how was this figured out and it has nothing to do with performance.

I favour a step further: creation of a Parliamentary Public Interest Advocate who may review parliament, have powers including fines for certain members of parliament, if parliament is not being run in the public interest. First I would change "Opposition Party" to "Alternatives Party" so that the question they face more frequently is what is your alternative. Next I would require all registered federal parties to produce detailed plans annually including projections for 5 and 10 years on what they stand for and their plans for various areas of government. If no plan is produced then a hit in pay. If a politician, in the view of the PPIA spends excessive time on personal attacks of others then they can fine the individuals. If a politician does not answer questions sufficiently directly in question time then these individuals may be fined. As parliamentarians are earning a pretty packet of pay they have a responsibility to conduct themselves in a responsible way.

I'd have fear in my eyes too if I couldn't afford to roll over my BMW lease every 3 years and own a flat on Bondi. Oh wait. I have neither of those things and never will.

A large percentage of the population gets by on much much less. If you're a senior executive you can afford to put away more each year than many of your employees earn. I know I sure as heck don't earn anywhere near the $175K maximum. Harden up and learn to live within your means like the rest of us.

Is it not somewhat ironic that those criticising super tax breaks will be unaffected by adverse changes? As well as federal politicians, we have senior civil servants at treasury harping on about the unsustainability of super tax breaks. Would they have the same opinion in respect of the main residence tax exemption? Why is the family home more sacrosanct than retirement savings, from a tax perspective? Going forward they are both critical in respect of the long term welfare of most Australians. If we are going searching for revenue let's open it up all the way - tax gains on main residences above a similarly subjective dollar value, say $800,000 or $1.0 million. Of course this is political suicide. Nevertheless surely the principle is the same across the personal property of individual Australians?

I am frequently stunned at the inability of some writers to recognise obvious connections, and to understand that what is morally and practically reasonable in one sector of society is equally reasonable in another. At least that is what my childhood religion taught me, morality was universal.

The writer suggests that for a comfortable retirement a superannuation saving of around two million dollars is now a prerequisite. I am quite prepared to go along with that. Robert's helpful calculation suggests that living costs are so high that even a person who owns his own home in a nice suburb (with all the advantages such as the membership of local exclusive clubs that often supply cheap dinners) - and who no longer has dependent children, needs an income of around two thousand dollars a week, preferably after tax.

Got that? - stay with me. By Roberts reckoning a comfortable life for a home owning married couple is insecure on less than one thousand five hundred a week. With present rents therefore a couple without children and renting would require a minimal income of 100 thousand dollars a year after tax - again on Roberts figures. Add the cost of rearing and educating children and you are up around the 150 to 200 thousand a year mark.

What's the reality out here, where Robert doesn't seem to visit? Well my courier friend earns seventeen dollars an hour before tax and has 374dollars left in a super fund he has had to access to live. My ex army friend is down to 22 grand in his, having had similar problems.

If incomes of 200 thousand are reasonable Robert, why do you rant so hard against trade unionists and individuals who battle to secure fractions of that sum? Many such people take home less than a quarter of what you and your mates see as vital. Are they all children of a lesser God? Is there a Chosen Class in your reckoning? Did your particular childhood religion teach you that, I don't think so?

We are told by you and your mates that to "compete" we must have cheaper labour - that whilst you have a right to have your lifestyles protected, others are immoral to strive for such levels with the only tools they have - a willingness to pull the plug, down tools, and say to you "this is just not fair"

And now you seem to want a new Government to do your dirty work for you. Try being nice!

Phil Clarke, agree. We keep getting told there is no class war, yet, every time we look around the already-wealthy have their hand in the taxpayer cookie jar. $800 thousand is not wealthy but it is wealthy enough to not require continuing subsidies from less well-off taxpayers. Does the author have a conflict of interest we should know about?

"this is just not fair"! Cry me a river. Most of the thugs in the mining union earn over $150kpa. Unions largely use extortion and bully tactics to steal from the rest of society. Last time I checked it was the unions that were using their Labor mates to do their dirty work. People like Craig Thompson, Eddie Obeid, Michael Williamson. The list goes on and on. We've all seen the violence that union members commit when they don't get the fistful's of money Labor promised them. We saw it in Victoria recently with the rioting in the street and assaulting police horse. Animals (and I'm not referring to the horses).

Ah! A hater!

Union members are thugs? What does that make banksters? James lastName's item doesn't read like he's any shrinking violet in these matters.

Rich people don't have the numbers to hold street rallies, nor do they need to do so given their power over police, politicians, and the law. Not one bankster was charged over the LIBOR fraud. Animals (and I'm not referring to the horses).

What do 'banksters' have to do with James' point? Typical leftist response to critiscism of you beloved worker's unions... Diversion. "What about xyz?? They are much worse than us and nothing is being done about them! So how dare you accuse us of any wrongdoing!" Pathetic.

Are you honestly going to argue that trade unions are squeaky clean and serve only the interests of their members?

I'll give you a tip... Both 'banksters' and unionists are cut from the same cloth. Both try (successfully) to quietly (and overtly) subvert the political process for their own interests, which is usually at the expense of the majority of the population. To say one group is worse than the other is ignorant. The system we have allows these people to exert unwarranted influence. Therefore it is a failing of the system. A system which we all continue to accept.

As for Super balances. I think people should be encouraged to fund their own retirement and not have to be dependent on unsustainable state pensions. In 30 years time, there will be even less tax payers than today, having to subsidise even more pensioners. There comes a point where it all collapses in a heap. Self funded retirement is the only way out of it.

Unions are less dirty than Big Business. That may be comparative rather than absolute, but saints are in short supply.

I'll give you a tip... if the aged pension is unsustainable, your view that the taxpayer should allow huge tax concessions for people who'd never qualify for the age pension would seem not merely absurd but impossible!

this govt has no choice but to be divisive, desperate, delusional. In any normal environment they have no choice but to so.
Expect class warfare on an unprecedented scale.
And Super will be at its heart.

I am stunned by the number of commentators here who seem to have issues doing simple maths.

The reason 1.5 or 2 million dollars is beingb used is based on the returns from investments.

A 4% return on $1 million is $40,000 per annum. 1.5 million is $60,000 and $2 million equates to $80,000. Thats before taxes and paying costs such as council rates, ever increasing energy, water and phone bills.

Personally, living in Sydney I would struggle to live on $40,000 per year, which would be forcing me to rely on a Government aged pension.

Michael James is "stunned" with the maths incapability of others. He then gives us a breathtaking example of his lack of understanding of how pensions are converted into retirement income.
The income from a pension is not simply a function of the operating returns of the capital in the fund. The pension income derived from a fund includes consumption of the capital. In the accumulation phase savers accumulate capital from excess income (incl assets accumulated in personal wealth). This is the aim of retirement saving - to consume savings when income generation ceases. Retirement income is not just the earnings of savings (capital). Actuaries would be out of work if capital preservation was assumed to be a fundamental principle of retirement incomes. And, the simple reason tax concessions are provided in the accumulation phase is not just to "encourage" to invest in superannuation. The concessions are provided with the quid pro quo that the accumulated capital (and the accumulated earnings thereon) will be consumed during retirement.
But, don't worry Michael, Gottliebsen made the same mistake in an earlier piece on superannuation.
This whole debate is driven by baby boomer self interest. The boomers got the free education, had the security of employment, dropped the tax rates to fund their consumption and now want the lesser educated, in less secure employment, after years (since about '80) in widening income and wealth accumulation inequality, to continue to fund their ongoing rorting of public revenues. And, they fried the planet.
I'm a boomer. I retired at 48 'cos I wanted to. Mid GFC I had less in my income generating capital pool than the $800K threshold my fellow boomers are bleating about. I saved from that income- I'm still accumulating. I live off non-super income from capital. I save there, too. I run my own SMSF and only pay for the mandatory annual audit. Costs? 0.15% of assets. Why are people focussing on possible taxes on pension fund earnings as the major dent in retirement incomes, when most blindly pay FEES based on accumulated capital.
Here's a basic piece of maths. If $1M earns 4% ($40K) and the earnings are taxed at 15% (rather than zero as per current pension rules), the tax is $6K. If the same fund incurs a set of admin fees of 2% of capital (which is low), the cost to the accumulated capital is $20K.
If you want to run a SMSF, run it, and stop bleating about a possible tax that won't even go close to shutting down the overall rort that baby boomers want everyone of younger generations to subsidise.
Finally, if you can't make the income numbers work in retirement, use your house to supplement your income. And, if you can't work out the myriad ways to make that happen you should just hand over your affairs to someone and pay them to work it out for you.
Baby boomers - the extractive, wasteful generation who want everything for nothing. And, I'm one.

Hi David, I like to point to you that income tax on $40,000 is about $4,547 using ATO tax brackets, so a tax of $6,000 for a pension of $40,000 doesn't make sense unless you are advocating taxing of self-funded pensioners more than any other ordinary income earned. Remember most of these people won't have any other income apart from their pension.

We are talking of tax being levied on super, not the individual. At present, when a super fund enters pension mode, there is no tax levied on earnings. If this exemption is removed, then 15% tax is levied on all earnings within the fund. So David's caculation of $6,000 on $40k earnings by the fund is correct.

Michael, I was simply using an example based on applying the same tax to earnings on pension phase capital as that already in place for taxing earnings generated on capital in the accumulation phase i.e. a flat 15% on all earnings.
The truth is I am all for a progressive taxation regime in super, rather than the flat, or no, tax rules currently applicable, so a tax free threshold followed by progressive bands makes sense to me. By all means make the same for super as it is on other income (fund earnings income, not pension income). But, if we can't get to the point where people think there should be tax payable on earnings derived from capital at some level, because they have a fundamental misunderstanding about what constitutes retirement income and how it came about, then we're stuffed, anyway. The systems massively distorted now, and it will get worse as more people fill their super funds with assets that generate income that is untaxable. As Treasury work has indicated, the trend is for bigger and bigger impacts on public finances as the super pool grows. We have built a Cyprus style tax haven inside our own financial system. That's just dumb.

You also need to consider 2-3% inflation every year. This would make a big difference.

You are supposed to draw down your superannuation so that when you die it reaches zero provided you lived out your life to your life expectancy.
The idea of superannuation is not to leave a residue to your estate to squander.

I ask myself when will they create a proper universal retirement scheme for all, which would do away with the aged (welfare) pension, would treat superannuation during contribution/growth phase as 'deferred', and then tax it at marginal rates as a pension in retirement, with any residuals (because of early death) remaining in the fund to benefit those who live past their life expectancy.

"The idea of superannuation is not to leave a residue to your estate to squander." This exactly the idea and all those millionaires who made their super money via superannuation vehicle with paying less taxes than anyone else, have to understand that. Superannuation is not a tax heaven for wealth transfer to the next generation.

Governments must apply the same rules to Govt supers. AS they are UNFUNDED the benefits need to be reduced to where the taxpayer can afford and not have the taxpayers superannuation savings ( yes their own money!) raided like we are in Cyprus.

"t's now generally accepted that single people need between $1.5 million and $2 million to retire comfortably"

That is the most stupid comment I have ever read from Business Spectator. You can live quite successfully on much less than these exorbitant amounts How would an average worker accumulate this amount of super? Do the numbers Robert not general unsupported claims. This destroys the credibility of your argument

Read more: http://www.businessspectator.com.au/article/2013/3/27/tax/ugly-economics...

I think the difference of opinion is coming from income earned before retirement. I noticed a typical recommendation for a pension target is 70 percent of pre-retirement income to preserve their life style in retirement, plus to pay much higher medical bills. This target pension will be different for a person earning $200K and $50K. So higher income earners need to save more to preserve their life style compared with a lower income person.

What can we expect from an amateurish NEW government paddling up the creek without a paddle.

Gillard deliberately announced the date of the election seven months ahead of the requisite caretaker mode period to slash and burn her way to an election victory. All we can do is sit and watch. Why do we feed a Governor General?

It will take historians many years to diagnose the past six years of hard Labor..

Even if your "slash and burn" assertion is correct, the election announcement is utterly irrelevant.

"If Gillard walked across Lake Burley Griffin, the headlines would be 'PM cannot swim' ".

I disagree with the raiding of super proposed by Labor and their idea that $800,000 is considered 'rich' to live off for 20-30 years (and I disagree more with Liberal's idea to punish the lowest income earners and reduce their super too).

But the whole gender highlighting in the article was irrelevant, and an over the top ploy to be all emotive.
ie, "the superannuation funds of females and males who are getting close to being able to fund their own retirement" could have been better said as "the superannuation funds of those/people/workers who are getting close to being able to fund their own retirement".
The whole attempt to bring about sympathy for your argument would work better if we didn't already know that more males would be hit by this cash grab than females, so you were better off leaving gender out of it to mount a better counter-argument.

Robert

When will you carpet Tony Abbott and get him to commit to what the Coalition WILL do in response to any slug by Labor on Super?

The media MUST play it's part in helping us become informed on where each side stands.

Cheers

I've been monitoring the self managed super funds of our accounting and financial services clients for over 20 years.Most of them were prudent savers who made lifestyle choice sacrifices to increase super contributions and were encouraged by the tax deductions established under treasurer Keating.In not spending all they earned they gave up the opportunity to draw an aged pension,particularly in the early years of retirement.But as the minimum pension they are required to draw increases with age in 5 year increments a proportion of those who live to grand ages will eventually become elegible for partial pensions.They do however save the public purse a substantial amount in pension payments over a number of years.It is uually in my observation those with lesser amounts of superannuation who are more likely to spend down quickly to the point at which they become elegible on means test to access a full aged pension with associated benefits.Unfortuneatly the profligate spending and borrowing of this government is causing it to attack the benefits of those who have elected to forego spending in order to save.In doing so they will create a spend it now mentality which is the antithesis of the Hawke Keating governments recognition that in order to deal with a serious foreign debt problem Australia had to create a national savings scheme i.e superannuation.Above all its a continuing manifestation of class warefare on an unprecedented scale.

This is an excellent comment and deserve careful reading. Unfortunately reading the other comments I get a feeling that some people are more motivated to get their hands on the money saved by others in the short term and won't be concerned about the longer term damage such acts will cause. I suppose if a person is living on age pension he would not or could not have much sympathy for another who has accumulated North of $800K, which is entirely understandable. On the other hand government playing short term politics at the expense of long-term wellbeing of Australia is unforgivable. They should know the damage they are causing, so they are reckless to say the least.

Tend to agree with the Phil,Steve and Keith camp here. I'm a big fan of our Business Spectator forum, but since the lads became cashed up ( after selling to News Corp), I think they've started thinking like to asset rich camp they now belong to.
The bigger issue ( as regards Super), is what is the justification for the Libs plan to make it tough for low income earners to build super?
Is it a case ( Rob)..of ...well..that lot will never need a new BMW or a fresh coat of paint on the beach house...so they don't count?

The other obvious point the ALP doesn't seem to understand is that many small business people have their assets in the business until they retire, and the contribution rules discriminate against them by preventing them from putting adequate amounts into superannuation. This will likely cost many, many votes. Alienating senior female executives and professionals as well is Not Very Bright.

Robert

what is super supposed to do? Wasn't it set up so that the amount of Govt funding for the pension would not cripple the ability to provide all the other services a modern prosperous society requires?

Why do the majority of tax perks go to the very wealthy who will most likely never receive a pension. Surely spending money to save spending costs that were not going to happen is the kind of waste and mismanagement you complain about all the time.

I have no idea about what kind of life style you want to live when retired, but 1.5 million seems to be more than a bit rich. Maybe you've been getting your figures from the same firms that provide usage predictions for toll roads, or who project the amount of capital expenditure required for the electricity poles and wires.

A super balance of 600K should provide an income of around $22.5K pa. This is more than the current pension.

Super is just a tax effective retirement investment vehicle that is designed to minimise the amount of money spent on the aged pension. It is not meant to provide a 5 star world travelling retirement. If you want that then by all means invest outside super, but don't expect the rest of society to subsidise you.

It is time for the Australian People to stand up to these bloody politicians (all of them I don't differentiate here) and bureaucrats, and insist that what is good for the goose is good for the gander......what is happening here makes me absolutely sick, as it should all of you?

The message should be loud and clear - lead by example or leave it alone!

Why is the arbitary taxing of superannuation deposits considered any less unacceptable in Australia than taxing people's bank deposits in Cyprus - because that is what it amounts to? Ok, we have the class warfare angle, so those most likely to vote Labor are cynically assumed to be too poor to be affected - but the principle remains the same. Ideologically liberal superannuants are being targeted as if they were simply Australia's version of Russian oligarchs - fair electoral game!

What about waiting until the Budget and finding out what is actually proposed, then writing an Opinion piece, rather spreading alarm and controversy without any substantiation.
I am sick of Journalists trying to influence Govt. policy,with
pre-emptive articles designedto mobilise self-interested public opinion.

Whilst I'm a low tax Austrian eco kinda thinker, anyone whining about only having 800k to retire on (20 years at 40k a year drawing down capital assuming no return on investments) ought to get some perspective.

As one earlier commenter said, if you have 800k plus in super, what sort of assets (house?) do you have? What sort of income (any sort of pre retirement planning?) were you on.

Poor old female execs (200k a year?). If you can't do some decent planning on that sort of wage or asset base, how did you even become an exec.

Oh, BMW. Flat in Bondi/etc.

Live within means and there should be no prob. I think people have rocks in their heads if they think they can spend spend spend whilst working and have a ridiculously lavish retirement.

Really, if you planned well, and have income streams, and own your home, some of the figures being bandied about here are more than enough.

Disclaimer: I'm all for people trying to keep their money away from gov't (I have a SMSF and soon Bitcoin) but really and truly. I'm also all for the closing of loopholes that favour wealthy people. I also do not begrudge success and wealth.

Great article and very good point :
“It's now generally accepted that single people need between $1.5 million and $2 million to retire comfortably using superannuation as their main income source.”

Here is the exact truth:
The current average Super payment for people retiring in 2010/ 11 without extra contributions was $192 a week, contributing from 1985 at the average income it makes around $150K in super to roll out. (Check Mon, 2013-03-25 16:31 After Labor’s purge, now for the budget Alan Kohler25 Mar, 10:48 AM)
According to the ABS more than 70% of us will rely on the pension as principal source of income.
If we do not want to return to a contributing insurance(*) scheme such as in most OECD Countries
at least we should pay the pension according to years of work in Aussie land, it is just more fair, albeit just one problem : “currently we have no registration system to capture exact contributing.”

Another thing
“Yet Swan and Wong are making their decision on the basis of totally incorrect figures calculated by Treasury and in the misguided belief that people with $800,000 in a superannuation fund are "rich", “ I don't think it is necessary the most important fact.

The most important fact for more than 85% of voters is that 50% of super contributions will be deducted from the pensions, possibly 100% if we follow the wishes of many ultra socialists, that means for more than 85% of people, at this point I time, the super will be just another tax!!

* I think we had one before during the Menzies years, but I was not down under!

Presumably the above correspondents see no inequity in the top Top 5% of earners gaining approximately $30000 in tax breaks from Super.
Meanwhile those on New Start..........

I am not trying to judge on inequity I am just trying to give the facts. The way things are going the big winner will be the cash in hand economy, not jobs, not feeding the market loop as intended by Paul Keating, Kelty Hawkes et al.

I am flabbergasted that people talk about these million of dollars in Super when for most people the median super payment will be between $150 and $200 weekly and the way Wong and Swan are going we may be looking at dollar from dollar deduction from the pension for more than 85% of Australians, at this point in time the super will be just another tax, talking about millionaires yes, but dont let this labor mob slips their hands in all of us while we get focussed on millionaires, YES IT IS BAD to escape tax, it's worst to be naive and take our eyes off the ball, it's just what they want us to do. it is much much worst.

To rank priorities and a glimpse of the whole picture, one have to look at the combined picture of Super weekly payments and the hack on the pension from these, for a lot of us 50% today 100% may be tomorrow for 85% of us, we dicover that when we retire, I am retired and hope I will still be able to buy a car, an old rustry cranker to go around without a 50% extra tax.

Do you not have access to Excel, Robert? Or an annuity calculator? Why not create a spreadsheet where your assets diminish to 0 at age 100 (super, real estate and other investments) and see what annual income you end up with? You need much less than $1.5M-$2M to have a very decent standard of living. Say 60K/year. That's 5K/month, mostly tax free. Adjust for inflation. Still don't need $1.5-$2M. And remember, the age pension kicks in at quite a high income level as your assets and other income gradually diminish.

It is not the job of the Super system to provide a nest egg for you to pass on in your will. Or even to preserve your large family home until you can't manage it anymore.

If you live 30 years as a pensioner, with $ 60K annually you would need $1.8 million.
I assumed 4% return on the fund each year which after tax will cover the inflation rate.
So $1.5-2 million is not so far from what is really needed.

I agree. The inflation rate is the real worry for me. Its hard to gauge and the CPI does not cover it as important items are not included. The inflation rate is higher I believe. Fine if you intend to peg out at 75. Without the pension all medicals are full cost, plus hearing aids for those who are concerned, check current prices which are more than half the $22,000 pension as suggested by one poster for my self funded father. Swapping slippers from one foot to another when they wear out is no fun at 95. Self funded people get no medical or other deductions for registration, utilities etc. The money saved into super is not spent on fun, its by going without and when the ancients spend, they pay GST.

What the ALP are doing runs true to their form. They are hell bent on forcing their dogmatic beliefs on tame Australians, because domesticated people suffer in silence.
Show me where our federal constitution allows for groups to govern Australia. There's no ALP, or Liberal party reference, just individuals holding office as the representatives of people in electorates.
That successive groups have dominated the house of representatives, so to have they illegally and immorally, redirected large volumns of money to themselves.
'Ah'. You say. 'They hold the majority and the majority rules'.
'No'. I say. 'They defy the federal constitution and have done so for decades'.
When our federal constitution is strictly enforced, [ and it shall be so, because that's the governor generals job, as well as ratifying the laws that both houses present], nobody will get a life times income, as they currently do.
And, I want to know when the federal government gained power to take more than 25% of all income, [ reference section 87 federal constitution ].
And what did that parliment decide, regarding division of the remaining moneys to the states and territories. Was it 30% - 70%, or 40% - 60%, or what? Come on people, who's got the money? Follow the money trail, because you will find the crooks right where the dollars are.
Stop being so lazy and read the federal constitution. Focus on sections 81 to 121, which details who does the taxing and who gets what percentages of ALL, yes all federal income money.

Cannot wait for September 14 to come along. The government is only looking at the short-term and putting greater pressure on future budgets by ensuring that those that have taken responsibility for saving for their retirement will not succeed and will have to rely on the Old Age Pension. So much for Julia Gillard promising that superannuation is safe under labour - is this yet another broken promise.

It would be a miracle if the others differed on this. Keating did his best on this. Labour was different then.
The shareholders and retirees were very vocal and publicised as objecting to the tax aligned with resources profit as this would impinge on their super funds in some fancied major reduction in dividends. So we all have to cop this. They get the government they deserve.

Most of the postings and this article too are about the contributing side, the accumulating days, please look at the retirement side and super payment side too, and look at the combined hack from super weekly payments(not contributions) for people having retired before the whole super thing becomes just a farce, another tax.
You are taking your eyes off the ball, you are taking your eyes off the ball.

The increasingly vicious debate between Right and Left in Australia and elsewhere simply reflects the old contest between plutocracy, on the one hand, and democracy, on the other. The political pendulum swung violently towards the former as the Neo-Conservative apologists got their fond dreams realised through their privatise-everything, deregulate-everything programme in the decades leading to the recent financial crashes. The artificial boost given to our economic growth and apparent wealth, through the resulting credit-funded asset speculation, kept the average untutored voter happily in the pro-democracy camp even as the pro-plutocracy minority cashed in the real benefits. In Australia, mandated super was the chosen vehicle for keeping the majority quiet around the BBQ. Until, that is, the wheels came off the new economic model, and the world banking system tanked, together with the overblown asset markets into which the super managers had 'invested' those savings. We now seem to have no choice between having those life savings directed towards preserving the plutocrats and their institutional and political representatives who created the systemic problem, and demanding our democratic rights to be treated equally. The delicious irony is that we will not be dispossessed through the normal left-wing wealth redistribution policies, as the media would have us believe -- but rather through direct right-wing confiscation 'to save the system', as in the case of Cyprus, or else through the eventual hyperinflation that their desperately reckless credit creation policies must entail. It's no longer a matter of scrimping for retirement through sacrificing incomes into private pension plans -- it's a matter of cutting our future lifestyle expectations to realistic levels while banding together to stop the theft.

Nice and refreshing analysis of the current situation I agree with fully.

Given Robert's earlier articles on this topic its clear that the super sum reqruied is driven by a view that "secure" investments earning on average 4% mandate a principal amount of $1.5 - 2 Million, delivering a retirement income of $60 - 80K pa. Sounds reasonable
What's absent from discussion is recognition that this leaves the super pot intact for the heirs' enjoyment. Pension recipients clearly have no capital sum to bestow upon their heirs. Clearly with such large amounts being passed through generations, and nothing passed to recipients of governent pensions, envy will do its work.
With only 6 months till election time I doubt Labour can bring Australia to European equivalence in terms of ratios they presently use to show there is plenty of room between us and our northern peers.

I think any controls on superannuation should be more on what you put in rather than take out.

There is no doubt that people on high incomes get the most benefit from Super. If only because of their high marginal tax rate.

People of lower income get much lower tax savings.

So I think we should forget the amount of the superannuation balance for taxation purposes and just make sure that everyone gets similar benefits for money going in. If that means that people on $50,000 a year or even more get subsidized then so be it.

Senior female executives on high salaries can do what many people did in the past, make investments outside Super. It is possible you know! They will never qualify for a govt pension so why hide the money in Super? Yeah to avoid tax.

Why shouldn't those who have more than amply feathered their retirement nests be taxed more?

The majority of those who have the million dollar super balances are baby boomers and the like who have been the main beneficiaries of the artificially inflated land price and banking credit boom that they and they're policies have fostered onto Australia. For the past 20 years, and the past 10 years in particular, whilst they were moving through their peak earning capacity they have given themselves numerous successive tax cuts along the way, meaning they've actually contributed far less to Australian society than they should have.

The luxury of retiring at 65 is going to be a long distant memory by the time my generation start approaching that age, so why should the baby boomers with their fat, ill gotten super gains, be able to continue to live high on the hog, while everyone else has to pick up the tab for them?

As it is where busy trying to pay off the enormous debts needed to purchase a house of you lot anyhow, so boo-hoo if you can't go on your world cruise and have to holiday on the gold coast - tax em high, tax em all, I say!

Have a look at Martin Armstrongs work on housing cycles. Its not the Baby Boomers fault. Sadly its going to be all downhill for many years when it goes, but will start up again. Think of fractional reserve banking, and the bank's decisions to lend on 2 incomes, and to increase to 70, 90% and higher on loan to equity, add in the multiplier effect of the First Home Buyers gift and housing flies. I don't know what tax cuts you are talking doubt, but creep up the tax levels due to inflation means more tax in terms of percentage. And the real incomes are lower when inflation adjusted. And so we have the least affordable homes in the world. And the developers and the banks etc have done very very well. All the kiddies who went to daycare so 2 incomes paid for homes, suffered for bank profits. 20 and 30 year olds with similar education to me at that age have so much. Housing went up in the 60's to 1973, then up again in the late 80's and then up. Soon it will go down for decades. There were no free lunches for ordinary people.

I suppose that I too wouldn't be too worried about screwing with ordinary people's super if I was on an indexed pension from the day I retire, regardless of age, and have the ability to work without it effecting my said pension. Why should I care when I change the rules, again, when none of these changes will ever affect my pension. So what if Treasury have got their numbers wrong, again, you can't be spot on with numbers anyway, so what's a few billion between friends? Who cares about the national interest when I have a budget that I want to keep from falling toooo far into deficit. Sitting in my ivory tower, I could just look down on the common folk and wish they would be quiet, stop complaining and just understand how hard my job is to do. Oh the pain!!! :o)

Julia, Penny, Wayne - put your money where your mouth is. Combine your changes with mush higher tax rates on pensions greater than $100k per year paid out of defined benefits funds to equalise this measure with the defined contributions funds. But no you won't.

If you have $1.5M with no debt and own home, you could retire from age 65 to 90 on $64000 pa index at 4% and your $1.5M earning an interest of 4%. When you finally meet god, you still have your home ($3M?) for your dependents. That is comfort!

Robert and many of your other commentators seem to have a funny idea of what it means to be rich. After 40 years in a professional career I was able to retire on an allocated pension of just over $400000. During my working life I was classified as being in the top 10% of money earners. At retirement my annual income with all the odds and sods of contractual arrangements was just over $80000 which meant of course I was slugged the 15% surcharge on my superannuation contributions. So presumably someone earning $80000 pa tday could easily rack up the $800000 superannuation saving during the working life.

So presumably someone at the 90 percentile is not a rich person by your definitions. It seems like we are really talking about a very small percentage of the population who are likely to be affected by the proposed changes to the superanniation rules. It seems that a very small group of people are creating a massive amount of noise to protect their exalted positions. Sad commentary really

Correct me if I'm wrong, but the proposal is actually a reduction on a tax break - and the shill rantings of Gottleibsen are flat-out wrong?
The basic point is that Superannuation inputs have been a way to avoid income tax, and obviously one that benefits higher income earners at a hugely disproportionate rate.

And to add insult to injury, these clowns that get defined benefits (and usually contributed nothing) get a 10% tax rebate when they turn 60 and worse still if they commute a portion (in NSW at least), when they die their widow/widower still gets 60% of the original pension!
And we're told to bend over and touch our toes...... do you think we have a right to be outraged?

Ian you are obviously playing from the Tea Party(Republican) hymn book the one that blames the poor for being poor, rather than the rich for being to greedy and driving down wages and conditions to such a level that in the USof A on basic wage you are entitled to food stamps. Do we really want that here! So get off your poor me entitlement wheel barrow and look at how we can better share the limited pie to help those in genuine need rather than imagined need.

The article by Mr Gottliebsen demonstrates the greed of those on the highest taxation rate. For too long they have been able to reduce their taxable income by 30% for any concessional super contributions made. I understand the proposed super changes will involve reducing the 30% subsidy to 15% in line with other wage earners. This is still a big subsidy and should not be a deterrent for someone on a large income from contributing to super. It is in the national interest to unlock this money currently given to those that do not need it for use on vital projects like NDIS and Gonski.

I am 69. I have in excess of $2m in my super fund for my wife and I. I contributed much of the money to super as salary sacrifice when there was a super surcharge tax of 15% to pay off the debt left by the Keating government. So much of it was taxed at 30% on the way in. Now this government want to tax me again and for the same reason - that is because Labor governments are incompetent managers of money.
As to the arguments about whether you need $2m or so to retire. People arguing that you don't need that much forget that your pension theoretically should be indexed at AWE (like the old age pension) and that it has to last much longer than the average life expectancy at retirement. This is because the average life expectancy at retirement is calculated on current mortality rates not future mortality rates. Currently mortality rates between 65 and 85 are decreasing around 3% a year (even 4% in some ages for males). So this must be taken into account. Also because the longevity risk is borne by the retiree one needs to plan on having enough money to last many years past the average age at death. I currently advise healthy people to determine their retirement pension on the basis that they will live to 100. Currently someone age 65 who is fit and well has about a 20% to 30% chance of making 100. When you include these factors $2m does not buy nearly as much pension as you would think.

Brent, most people just don't see the detail like what you've just described.
Sadly, too many Australian Losers' Party die-hards just play the politics of envy and spite.

At least we are now, thanks to Robert, talking about real living costs. Let's be grateful for that. Sometimes truth is like breathing fresh air, it wakens and stimulates the brain. His statement that the income from 1.5miillion to 2million in Super is required to live comfortably (so long as you don't pay rent) is like the voice of an excaped pet Cockatoo - and if you listen to what it is screeching from the treetops it is that on a income of less than 45dollars an hour you're stuffed - and you'll need nearer to fifty bucks an hour if you are renting. That's after tax. If you want the super tax concession you'll need another fifty thousand a year which makes you to need over 70dollars an hour before tax. All this is "just in case you hadn't noticed" (my emphasis)

It doesn't matter how you add it up, a minimum wage of 16 bucks an hour - or even twenty doesn't sound like "Fair Work" to me - and Abbott says he is going to make it easier to pay that or less.

So the comfort level Robert suggests is well over three times the minimum wage and presumes you have a housing assett of at least 600K in Sydney - that will get you a poor quality house at least (not the kind of thing I suspect Robert would regard as "comfortable)

So who is supporting who? Which way is the wealth trickling - down or up? Maybe Robert has yet to really see the chasm between wealth and dispossession.

This sudden interest of his in realistic living costs - is it that some of his mates are realising they could easily fall into poverty if the present unlevel playing field remains and somehow, happenstance or "government policy" chooses them as a victim?

A secure old age requires a protected, moderately prosperous, and secure life for everyone. If the rich do not contribute to creating such a social mean then there will always be a real risk that any of them one day could fall into the abyss they have created, the pit in which they have forced others to live their devalued lives.

Nobody as yet has commented that we now have a tax free threshold of $18 200 and as income from allocated pensions is tax fee at both income and asset phase, we can have investments outside of super generating $18 200 tax free.

A few points

$40 000 from Allocated Pension (5% -x $800 000) + $18 200 (Tax free threshold) = $58 200 (more income if they use franking credits. Your capital will be maintained at those rates. Capital approx $1.1 - $1.2 million

Westpac ASFA Retirement survey shows a single person needs a little over $41 000 for comfortable retirement. Therefore I feel that it is relatively easy for a person of suitable means to generate sufficient income for a comfortable retirement tax free

Current age pension for single person $19 076 ($733.40 x 26) = $19 068 (plus supplement)

Federal Government regardless of the party in office will have to deal with an ageing population and the costs associated. I have seen the income needs of many people decrease when they reach the age of 70.

Criticism is easy, solutions are much harder to find

We have a lot to consider going forward and the problems won't go away.

I am 70 years of age - I do not agree.

I also do not agree. You have not considered inflation for a start.

I am 66 years old and a fully self-funded retiree. I agree!

My fully franked dividends exceed my annul super draw down of 5% of the balance in my SMSF.

Since retiring, my income needs have decreased substantially as I no longer have to pay for work related expenses, such as business attire, travel costs, drycleaning, etc.

the title of your article is bias : ugly economics of SWan super slug. what is fairer to your eyes come to the rescue of these millions hard working people and what is in the interest of their decent retirement incomes or to come to the rescue of thsse highly paid Executives who have $800,00o in their superannuation and , and making the system unsustainable Common get your priorities right. Governing is a balancing act and must be fairer in the interest of our less favourable citizens not thoese Executives that have lived all their lives being the slaves of the bosses to the detriment of hard working families. Period

If the one thing that is achieved from these articles Robert, is that it exposes the hypocrisy of the political class that has guaranteed a superannuation system for themselves that is unavailable to the rest of the population, then this is a good thing. Every time I hear politicians claiming credit for the benefits they have provided for the rest of use via superannuation, I just shudder!

Jeepers Rob...what's the record number of replies to any one article ? You've hit a raw nerve with this one. ( Just needed to add one more...in case the old record is 72 contributions).
Quick straw poll: Most of us reckon its Disneyland, if you think it needs 1.5 million for a good retirement. I could be happy on enough for a 30 can block each week and an early morning cup of coffee.

These concessions delivered by Howard, as a desperate vote buying spree were never affordable and resulted in the greatest wealth transfer in our history. They have also contributed massively to the structural deficit Howard left us and also to the entitlement culture that Hockey railed about in London. It makes absolutely no sense for any Government to give more in concessions to voters to fund their own retirement than it would be to pay them a pension. That is economic stupidity of the first order and all the self justification and buck passing and arguments about Defined Benefits schemes, Politicians Super etc can't and doesn't change that basic fact.

Robert, please do the community a favour and I would suggest your duty spell out how this affects our politicians who get it well before 65. Set out the taxpayers unlimited contributions and the politicians contributions. I have a suspicion they like public servants get 15% plus yet they are not reducing theirs down to 12% Self interest always come first from the pollies . Where are the Greens, the Independents on this issue they so often purport to maintain a higher moral ground perhaps this is their chance to prove it . ( I realise that this is wishful thinking but perhaps it about time for the Press of which you are member too do some work though I doubt it).

Robert you should have told those women to become "pollies"

I totally agree with critics of RG’s calculation of what sort of income is required to live a comfortable life in retirement. The $32 billion in tax concessions that are handed out presently to top income earners will grow to $45 billion by 2015-6 and continue to grow exponentially if not reigned in. To put that in context that is an NBN a year.

According to ACOSS half of the present $32 billion tax break for superannuation contributions goes to just the top 12 per cent of income earners with the rest going to the bottom 88 per cent and those at the very bottom getting nothing, even after proposed reforms to achieve what end? Spending on the age pension is about $34 billion so if the superannuation concessions is meant to save the government from spending on the age pension, then it may be working but all it has done is shift the focus to already well-off retirees.

Or put another way, around $11,000 in tax concessions on average goes to each of those in the top 12% or just a little less than someone on a Centrelink pension or job search allowance. These tax concessions go hand in hand with the welfare for the middle class who still bleat how tough things are and we haven’t had a recession for more than twenty years. If they cannot manage under present economic conditions God help them when one does arrive.

Where is the equity and purpose of government support to those less well off when it is now possible to have a SMSF with a balance in excess of $1 million and still receive a Commonwealth Seniors Health Card and other concessions that many low-income earners do not qualify for.

This is NOT about class warfare. What is the point in merely adding to the funds of the already well off who will fund their own retirement anyway rather than add to the funds of those who may be able to require less in the way of a government pension?

You can have millions Robert and still be a fearful beggar.

And I suggest you don't speak on the topic of superannuation and the plight. Just talk your own book.

Graham Palmer I agree you would think a journalist would have done his homework well enough to present all the facts in an inbias way.
The language used "The Superannuation Funds are frozen with fear' give me the facts balanced unbias and let me make my own conclusions.

I remember my mother complaining as a stay at home mum whose husband died before the age of 60 the super she got was only 7/11 of what my father was entitled to had he retired after 60. She got just over the amount to get the pension but she didn't get the benefits of being on a pension. She wished my father hadn't contributed to super. I think many people in the future both males and females, will be in the same category ie they would be better off on the pension than with the limited super they get. I am the breadwinner on a high income ( not over 250k which was suggested was the needed aggregate for a couple for a satisfactory income after retirement) I did not return to full time work unti 10 years ago when I was in my mid 50s. If I want enough super to live on I am going to have to work until I am in my 70s maybe 80s . Even if I put in an extra 25k a year I am not going to have as much as those who have been contributing half that amount for forty or fifty years. My only hope is to take out as much money as I can from the superfund, make sure I am debt free and then go on a pension because Julia Gillard and Wayne Swan in their bid to make everyone equal obviously consider woman who stay home to look after children don't deserve to be equal to men who work all their lives. Even if they can get a high paid job they will never be in the same financial position at retirement as a male who works all his life earning a much lower rate with a much lower tax rate. I am sure there are many other women who will find themselves in a position they cannot fund their retirement because they return to the workforce late.

@David Thompson.
Know-all parasites who can spend other peoples hard earned money better than the hard worker that earned it in the first place are a pox on our Australian society. The reason that they want that which belongs to somebody else is because they, in their lives, they have been either a 'bludger', 'a 'waster', or a 'fool' (as in the saying that a fool and his money are easily parted).
I am a fully self funded retiree because I started my superannuation savings when I was 20 in 1968 (yes superannuation was available then although VERY out of fashion with the clever by half 'bottomless pit' consumers). I added extra to my retirement provision by keeping out of pubs, betting shops, and brothels, and I NEVER earned any more than the average weekly wage, and I never took dishonest 'sickies' either, and every new car I bought lasted me 10 years at least.
I intend to live at least another 25 years and I don't accept that a covetous looser like yourself has the right to tell me that I have to amortise the fruits of my life's toil to your arrogant formulae so that I eventually reach the same scary big fat ZERO that you obviously have to live with.
It is hard to feel sorry for people like you - it appears that you are reaping that which you have sown - which seems to be NOTHING!
Since 1968 I have already paid a plethora of taxes on my contributions, and now I have retired, after a lifetime of NEVER being given so much as a dollar from the public purse, I will "cut off any finger from any hand' that has the impudence to touch my property !!!
'COMPRENDI'

This contribution may have some merit if Gilson showed the slightest understanding of what he is talking about.
I strongly recommend Gilson seeks out some actual information (specifically avoiding anything written by the propagandist Robert Gottleibsen) before 'contributing' further.

the dissociation between government and citizens is now complete!

@ Wade Frankum,
MY comments are based on the reality of what has factually happened in my long life - NOT some theoretical fairy tale of 'magic puddings' and riches for those who 'squark' the loudest. I remind ALL that we are all human persons - not baby birds in a nest.
NO WHINEING - NO EXCUSES - NO JEALOUSY- NO JUSTIFICATIONS - NO BLUDGING - NO WOE TO ME- NO ROBBING ANYBODY ELSE BY USING EMOTIONAL BLACKMAIL.

JUST HONEST TOIL AND RESPONSIBILITY.
I have simply and proudly provided for myself and my family for a LIFETIME - including now which is for myself and my wife's 'autumn' years.
Please don't give me lame excuses as to why any of the able bodied of my age have NOT done likewise. By never ever bludging from the public purse, and paying my taxes all of my life, I feel I have done my 'bit' for those who are not able bodied also, and I have also found room to contribute to charity.
Do you have a plausible excuse, or is it a case of the status quo 'squeaky wheel' looking for yet another something-for-nothing handout?
The same message still applies to ANY of those who covet - "keep your hands out of my pocket"

The proposal is about taxing new super inputs, to minimise their status of a tax dodge.
It's not about taking money out of your super.

Shouting is no substitute for knowledge: Your response is entirely emotional and completely lacking in understanding.

Not quite. There is talk of taxing super funds in pension mode too. While at this stage, the target is funds of $1m or more, this will soon filter down to include lesser amounts.

Trudi, I am yet to see any vaguely credible reason to make me think that there will be a tax on super-funded pensions. I too, have read the breathless speculation, based on nothing.
Instead, I've been basing my comments on what's actually been suggested...
Correct me if I'm wrong.

The harshest, vaguely credible bit of speculation is that EARNING on superannuation MAY be taxed (at a rate of much less than 100% before anyone claims anything silly). Once again, this does not really constitute anything more than reducing an income tax concession and is undeserving of the hysterical replies we've seen.

Yes I did take inflation into account, as if you are generating tax free income in excess of westpac standard for a comfortable retirement you can save the excess and also if you are taking 5% tax free you have the ability to invest in a growth or balanced portfolilo that should also provide growing capital if you only take 5% and it doesn't provide a 5% return or more over 10 years you could always drawdown some of you capital. The reason many people I know over 70 have told me that their costs have reduced is that they are not travelling as much, particularly longer haul flights than they did when earlier in their retirement.

@Wade Frankum,
Blinkered vision is the affliction of the narrow minded and the thoughtless and those 'educated'? to always rely on in vogue past and parrot like 'mantras a la verbatum'.
Please consider:-
1. Your children's financial future and independance?
2. Your grand children's financial future and independance?
3. The Australian national debt and who is going to pay for it.?
4. The USA quantitative easing and the hyper inflation it will cause ?
5. The European money printing and inflation it is already causing ?
6. Japan money printing and the hyper inflation and national jeopardy that will cause?
7. China's obvious coming debt crisis?
8. The Wall Street "credit default swap" up and coming shake out that is likely to cause a TOTAL world financial collapse?

Surprise-Surprise - Without adequate INPUTS there can be NO adequate OUTPUTS, and 'INPUTS' equals 'PRODUCTIVITY'.- or in superannuation terms 'savings conributions'
Do you get it yet?

How Ammusing!!!

Where are all the efficient market people in BUSINESS Spectator??

The logic of the EMH is that those in a DBS must have accepted a LOWER wage in order to have EARNED the Defined Benefit.

Funny how easily the rent seeking 1% will dump there own IDEOLOGY for an extra $.

A few comments on your diatribe.

1) you claim "politicians in Canberra, having feathered their own nests with non-contributory schemes...." Don't make statements without research. If you care to check out information (legislation) about the PCSS, you will find that pollies have to contribute just over 10% for the first 10 years and a lesser amount thereafter and if the PCSS is anything like the CSS and PSS, these contributions are from their post tax income. Furthermore, to become eligible for a super pension, politicians must serve for 18 years (12 if they are not re-elected) and, new policitians cannot draw a pension before the age of 55.

I'm not favouring pollies, but I wish you would stick to the truth when you make statements!

2) My heart bleeds for the senior female executives "with fear in their eyes". How on earth
did those middle-aged bimbos make it into senior ranks when they have no capacity to manage even their own affairs, let alone managing coporate expenditure!

Perhaps they should weigh up the benefits of signing up for their next lease on a luxury car, or buying their next Gucci bag or Manolo shoes against the benefits of investing the money instead, be it in super or investments external to super.

Trudi, you have illustrated the failure of open and full disclosure about our politicians .My gripe is that no-one wants to set out the benefits that politicians receive including for some double dipping for some. I note you refused to state the employer(taxpayers) contribution Which is? You could supply that or is it inconvenient?
I put it to you that there will be many politicians retiring or disappearing between now and at September next, perhaps you should set out what benefits they will receive.
I note that you did not address the 15+% that commonwealth public servants already receive.Are you advocating that it should be reduced to the 12% so it could be a level position for all .
We really need some clear and open discussion and the facts about all this.

The irony if not downright hypocracy of this article from you Robert in regards to your statements about public servants having some overly generous superannuation system, whilst decrying indivduals with $800,000 in a superannuation as being poor.

I am one of those (ex) public servants; 6 years ADF service in the Royal Australian Navy from 1988 to 1994; my overly generous superannuation is worth after almost 24 years a grand total of $42,000, which will give a TAXED (I don't get the tax free after 60 super like the poor people with $800,000 in a private sector super fund) pension of $3,500 per year before tax.

This $3,500 per year is 1/3 of the old age pension, and the reason it is so low is that due to various employers (ALP 1988-1996, LNP 1996-2007, ALP 2007-current) refusing to fund their employer contributions it is unfunded, frozen in my Military superannuation account, and unable to be rolled over to the superannuation scheme of my choice.These employers would rather pay for the mounting and exceeding expensive re-election welfare payments you constantly support; baby bonus, FTB A&B, FHB grant, etc etc.

How about you do some research on superannuation and explain why those of us who served our country, are locked into a superannuation scheme that will see some us us earning a pension in retirement that is less than 1/3 of the old age pension?

Jason I find your proposition a little puzzling you worked for 6 years only? Is his your only employment? I note that most employees only had compulsory super since 1992 . Can you please explain as it appears you were one of the priviliged few to have superannuation in 1998 .So a little more please .

I was in the ADF for 6 years from 1988 to 1994; running my own business since 1994 to present John.

The government to save money in the late 80's early 90's paid ADF members as employer superannuation contributions instead of pay rises.

How is it priviliaged to have an employer not pay their superannuation contributions into an employee's account during their employment with the employer? Non-payment of superannuation by the government will see my superannuation frozen in the Military super scheme for 36 year from when I left the ADF in 1994 till 2030 when I turn 60. This frozen superannuation will not earn any interest for 36 years and will see any pension I draw from the fund (my pension in otday's money is around $3,600 per year) subject to taxation unlike private sector tax free superannuation.

I was in the ADF for 6 years from 1988 to 1994; running my own business since 1994 to present John.

The government to save money in the late 80's early 90's paid ADF members as employer superannuation contributions instead of pay rises.

How is it priviliaged to have an employer not pay their superannuation contributions into an employee's account during their employment with the employer? Non-payment of superannuation by the government will see my superannuation frozen in the Military super scheme for 36 year from when I left the ADF in 1994 till 2030 when I turn 60. This frozen superannuation will not earn any interest for 36 years and will see any pension I draw from the fund (my pension in otday's money is around $3,600 per year) subject to taxation unlike private sector tax free superannuation.

I was in the ADF for 6 years from 1988 to 1994; running my own business since 1994 to present John.

The government to save money in the late 80's early 90's paid ADF members as employer superannuation contributions instead of pay rises.

How is it priviliaged to have an employer not pay their superannuation contributions into an employee's account during their employment with the employer? Non-payment of superannuation by the government will see my superannuation frozen in the Military super scheme for 36 year from when I left the ADF in 1994 till 2030 when I turn 60. This frozen superannuation will not earn any interest for 36 years and will see any pension I draw from the fund (my pension in otday's money is around $3,600 per year) subject to taxation unlike private sector tax free superannuation.

I was in the ADF for 6 years from 1988 to 1994; running my own business since 1994 to present John.

The government to save money in the late 80's early 90's paid ADF members as employer superannuation contributions instead of pay rises.

How is it priviliaged to have an employer not pay their superannuation contributions into an employee's account during their employment with the employer? Non-payment of superannuation by the government will see my superannuation frozen in the Military super scheme for 36 year from when I left the ADF in 1994 till 2030 when I turn 60. This frozen superannuation will not earn any interest for 36 years and will see any pension I draw from the fund (my pension in otday's money is around $3,600 per year) subject to taxation unlike private sector tax free superannuation.