Guest Post: Is Superannuation a socialist plot?

Regular threadster “.” sent though this guest post.

While browsing the library I found a book by John Leard – Australia, the Worst is Yet to Come. At pg. 74-75 ‘The ACTU’s Real Motives’

There is grave doubt whether the whole thrust of the ACTU’s Superannuation deal is really in the interests of the members whose funds they will be administering.

It is interesting to quote from a paper delivered to the 1981 ALP Special National Conference. The following was a statement made in regard to Superannuation:

There are a number of issues raised by the extension of Superannuation Schemes. Ultimately these questions include the examination of the investment strategies of
those funds and their implications for industrial relations, employment and structural changes in the economy.

Conflicts may arise from those investment decisions. For example, investment in highly profitable areas will maximise the member’s retirement benefits, but the social
consequences of that investment may create a conflict.

Obvious examples are investment in Uranium mining (pre three mines policy, methinks!) or firms which operate in South Africa.

What we must recognise at this early stage of union involvement in the Superannuation issues is that control over the funds will provide unions and
governments with considerable financial leverage. That leverage can be used to advance the cause of Socialism in Australia.

There you have it.

The real objective of these funds is not the welfare of the Australian people, nor the maximisation of returns for those who have entrusted their funds (albeit compulsorily) to union-controlled schemes, but to further the cause of Socialism in Australia and to give the unions and the Government increased political leverage.

If the average Australian will buy this, he has rocks in his head!

We all know that in a collective bargaining agreement, negotiations will be dominated by the employer and the union. The union will not give up their position in terms of bargaining power, nor will they allow individual agreements – or choice varying from their objectives. Unions nearly explicitly exist to disadvantage non members – let alone pricing marginal workers out of jobs and robbing their own rank and file blind.

Essentially what we have observed is that the unions helped to create superannuation – whether we are union members or not or want to invest in superannuation- but to advance socialism in Australia and not to “run funds only for the benefit of their members”.

This was predicted by John Leard over 26 years ago and stated as a goal of the ALP over 31 years ago.

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44 Responses to Guest Post: Is Superannuation a socialist plot?

  1. Sinclair Davidson

    . – not sure about this argument. Sure the unions might have thought they could implement socialism with other people’s money but it ignores the growing economic aspirations of their members. What they hoped to achieve and what they can achieve will be very different.

  2. papachango

    Calling super a socialist plot is a pretty unconvincing argument. It’s your money, and with reforms such as choice of fund and self managed super you can generally have a fair degree of control over how it is invested. From a strictly libertarian perspective the government shouldn’t forcibly lock away 9 to 12 % of your income, but a moderate libertarian might argue that, subject to strict held in trust rules, it’s not a bad compromise to encourage self-funding retirement and reduce people’s dependence on the government.

    If you want a really socialist pension system look to France. And you can’t blame Hollande for this as it’s supported by what passes as ‘both sides of French politics’. Essentially you work for between 38 and 45 years (as dictated by the government, and differes for some industries), and, as well as paying taxes, you get a large chunk of your salary taken away as ‘contributions to retirement pension’.

    However, it goes into a sort of common fund, and what you get when you’re forced to retire by the government at 62 (Hollande’s changing that back to 60) has no bearing on what you contributed – it’s an average amount based on the years you’ve been in the workforce.

  3. .

    Sinclair cut this out, papa, after I quoted Leard and his quote of the ALP conference;

    Now if we look at section 32C(6) of the amended Superannuation Guarantee Administration Act 1992 (Cth):

    http://www.austlii.edu.au/au/legis/cth/consol_act/sga1992430/s32c.html

    A contribution to a fund by an employer for the benefit of an employee is also made in compliance with the choice of fund requirements if the contribution, or a part of the contribution, is made under, or in accordance with:

    (a) a pre-reform certified agreement; or

    (b) an AWA; or

    (c ) a pre-reform AWA; or

    (d) a collective agreement; or

    (e) an old IR agreement; or

    (f) an ITEA; or

    (g) a workplace determination; or

    (h) an enterprise agreement.

  4. Louis Hissink

    The truly blind are those can’t see the Gramscian infiltration of our institutions over time. It’s why ALP heavies always mocked anyone who expressed the thought that the Fabian Society was a bit more than a polite debating society.

  5. kingsley

    I’m with Papachango. SMSF is the key. This turns workers into capitalists. Already you see it a bit with mining tax where a lot of people are realising “hang on what ever they take off the mining companies they are taking of my super”
    This (SMSF) could have profound impacts on people’s voting patterns if enough can be made aware this is a real option for them

  6. Rabz

    Howes your fatherland is correct.

    They need to be wiped out.

  7. .

    Kingsley,

    I’d really like that to happen as I think it would gut the resources of the unions.

    Why do I need to pay $1000 a year to have one though?

  8. papachango

    SMSF is a good concept, but I understand it’s very bureaucratic and a lot of work to set up and maintain.

    Even more important is choice of fund, which means you can pick your own retail fund if you don’t like the union run industry fund your employer

    This means that people without the time, inclination and/or fiancial literacy to run their own SMSF still have some choice about how and where their money is invested.

    Though not all industry funds are bad, even if they’re run by union reps. Unlike internal union accounts, they have serious oversight from APRA and ASIC, so there’s extremely limited possibilty of HSU-style rorting of members’ funds.

  9. pete m

    It is much more than $1,000 / year for self managed funds. You have to have 2 auditors sign off on the accounts. Min cost I’ve heard is $2,500 – $3,000 p.a. You really need $200K in the kitty to justify this expense over a retail fund.

  10. .

    Even more important is choice of fund, which means you can pick your own retail fund if you don’t like the union run industry fund your employer

    Some people can’t. Unless they transfer funds after every pay. This would be quite costly.

    Unlike internal union accounts, they have serious oversight from APRA and ASIC, so there’s extremely limited possibilty of HSU-style rorting of members’ funds.

    I will believe that after s32C(6) is repealed and there is a royal commission into the unions with a full audit.

  11. blogstrop

    The mismanagement of super funds in order to throw good money after bad into doomed green schemes is a concern, and any ideologically driven investment for “social engineering” towards a more PC society also has no place in fund management which should be focussed on the best result for the members consistent with legal and fiduciary duty constraints.

  12. papachango

    Dot you’ll have to translate s32C(6) into English for me I’m afraid, as I’m not a super law expert

    It looks like a whole bunch of get out clauses from choice of fund – but how extensive is it, and how many people are forced into industry fubnds as a result?

  13. kingsley

    Papachango – there is no denying there is some paperwork but I think some in accounting and financial planning are being very devious about painting this up to be far far more than it really is. For instance I enrolled 2 clients last week from a competitor. They are paying competitor $8K each we will struggle to get our bill up to $3K each.
    Also a lot of people drawn to SMSF and buying a property. That should not cause them any more work than owning a rental property in their own name.
    The set up I must confess can be a bit protracted but guess who the culprits usually are there? The big funds devise hopelessly way too complicated forms to do a simple roll over to SMSF. Some aren’t too bad I have seen some who require just a single A4 page to be filled out in plain English, others its a 78 page exercise in gobblegook.
    Another positive and is almost like watching competitve forces happening in front of your own eyes is the banking/borrowing costs whilst still high on a super loan/LRBA have reduced at least 2/3rds over last couple of years but again you need to shop around

  14. .

    Some aren’t too bad I have seen some who require just a single A4 page to be filled out in plain English, others its a 78 page exercise in gobblegook.

    You ought to be able to get a writ of habeas corpus for your own money!

  15. Adam Kane

    Compulsory super is basically this:

    “We need to take your money and save it for you, because you’re too stupid to manage it yourself.”

    Anyone who agrees with superannuation agrees with a socialist, big-government, nanny-state management of your own finances… for your own good.

  16. Infidel Tiger

    Kingsley = what do you reckon is the minimum you need to run a SMSF?

  17. .

    We would be so much better off without superannuation and without income tax.

    Show me a country without income tax that has a problem with its savings rate being too low.

  18. The Self Managed Fund alternative isn’t as complicated as some think. Yes! there are compliance processes which can be onerous for the unwary. Having said that, if one uses a professional manager a SMSF can be rewarding.

    Because the members of an SMSF find they now have transparency, at last they know what is happening.

    More to the point; they probably wouldn’t be investing in wind & solar farms, desalination plants and geothermal plants either without it being their decision to do so.

  19. .

    I

    Oh Dear God…
    15 May 12 at 1:00 pm

    Looks like someone is afraid of the facts. Slow day at the ACTU conference love?

  20. brc

    While I think super as a concept is bigger than the unions, I think they saw what was in it for them if they hitched their wagon. Specifically : more control over members money, and the ability to direct capital to their own wishes.

    This is obvious with reportedly many industry super funds up to their eyeballs in ‘renewables’ and things like that.

    Howard and Costello did damage to this initial plan by trying to make super funds into little Cayman Islands where the self-funded retiree could shift money away from the taxman. This is gradually being unwound.

    I agree with super being a nanny-state intervention but on balance the idea of forcing people to save some income has merit. It’s the overall bias that most of that money ends up in equities that I have a problem with. That, and the continual salivating from meddlers keen to get their hands into the pile.

    How long until super funds of a specific size are forced to purchased government bonds to backstop the Australian debt?

  21. .

    How long until super funds of a specific size are forced to purchased government bonds to backstop the Australian debt?

    What we must recognise at this early stage of union involvement in the Superannuation issues is that control over the funds will provide unions and governments with considerable financial leverage. That leverage can be used to advance the cause of Socialism in Australia.

    Now do you guys believe me?

  22. kingsley

    Infidel Tiger – the lowest I have done is $80K to buy a $200K property in regional WA that was/is quite high yielding. Obviously a Super loan/LRBA used as well. If it is property it is a bit case by case.
    Another low cost scenario is people who just want to park it in cash. Not much for accountant or auditor to do. You might get away with a bit over $100K.

    The other situation I have had is people having had it explained to them they don’t have enough due to lack of economies of scale but they still say “well I’d rather be paying you blokes an extra grand and have control and NOT lose $20K than stay where I am in retail/industry super.” That’s a judgment and no more than that but it is their money so why shouldn’t they if they want too.

  23. kingsley

    I don’t know what the solution is without becoming one of those rent seeking bastards we all rail against on this site but there is part of me that thinks Govt should offer handsome rebate or something to people to go SMSF as recompense for forcing them to place their wealth into Super. ie “you are making me do this so how about helping me out with the cost”

    Trouble is I think it would just see my Profession and Financial Planners up fees by same amount and we’d be the benficaries not the investor.

    If you could solve that though it would be a fairly good compromise. You are compelled to do it but at least via SMSF you have proper control over where it is invested and when.

  24. Les Majesty

    Great post.

    Of course, since every Catellaxetard knows that socialism = nazism, we can deduce that superannuation = nazism.

  25. JC

    Yes Socialism = Nazism. give or take.

    However I don’t quite see how you connect superannuation to Nazism as the coercion is in forcing people to save, not stealing one’s money for de equality reasons.

  26. Just Another bloody Lawyer

    Actually a SMSF is very cheap to run.

    Setup can cost you a little more but on a year to year basis the only fee is your auditor. Which contra to a comment above only needs one for small funds.

    It need only cost you ~ $600 a year in running costs provided that you have a stable and conservative investment plan.

    There are those advisers who will try to tell you that the trustee must be a corporation in order for the scheme to be constitutional however my view is that is horse***t. Although if you go that way it will cost you the yearly company impost on top of the auditor’s fees.

    I will now stress that whilst I am a lawyer I do not practice in superannuation or taxation law and NO-ONE should rely on this post as legal advice and should instead seek independent legal and/or accounting advice.

  27. JC

    Actually a SMSF is very cheap to run.

    Don’t give a shit. They are political risk as it would be the first thing a larcenous government would attack if it was in dire need of money.

    I don’t have a super account and never will for that very reason.

    They just doubled the tax rate on those earning 300k. You really think that in a crunch they wouldn’t attack the capital in some way even through directed investment? Shane Wand wouldn’t give it a second consideration and would argue that it was for the greater good.

  28. big dumb fu

    It’s always struck me as a scheme to keep the funds flowing into unions to pour into the ALP election warchest in the face of a steady decline in union dues.

  29. brc

    Nazism == socialism. Just two branches of the evil left, one concentrated on shunning other countries and the other intent on the entire world becoming socialist.

    The reason they ended up hating each other so much is that the left reserve their special hatred for people of their own clan who don’t follow their way. When you’re of a totalitarian mindset, everyone must agree with you, and those other filthy socialists who think you can do it another way are the ones who most need to be despatched.

    As for superannuation? Well, it’s just another big government idea. Taking peoples money off them ‘for their own good’ and then giving it to the financial industry to do as they wish. Turns out ‘as they wish’ mostly means ‘losing it’.

    The funneling of average persons savings into the equity market when the average person has no ability to correctly ascertain financial risk is close to criminal.

    I spent some time on a project once where UK pension funds were going through and redressing ‘investors’ money after blowing the lot on the dotcom bubble. Looking through the absolute BS told to them by the financial ‘advisors’ it makes you realise that whomever was coerced into giving the foxes the run of the henhouse was either on the take or patently stupid.

    As I already said, the idea of forced savings isn’t so bad. But funnelling the majority of that cash directly into equities is a terrible idea, unless you happen to co-ordinate your career and retirement with the equity market falls and dips perfectly.

  30. kingsley

    JC what makes you think they wouldn’t shaft trusts companies etc?

  31. JC

    Kingsley

    The reason is because the least important cohort to these lunatics would be the older well to do retiree..

    The could raise the tax rate or even steal capital from them and there wouldn’t be a great deal of screaming. Companies are a different kettle.

  32. twostix

    It’s always struck me as a scheme to keep the funds flowing into unions to pour into the ALP election warchest in the face of a steady decline in union dues.

    Members Equity donated $55,000 to Emilys List last year.

    Prudent investment I suppose.

    http://periodicdisclosures.aec.gov.au/AssociatedEntity.aspx?SubmissionId=48&ClientId=1081

  33. .

    Good. People are waking up to this.

  34. JC

    Members Equity donated $55,000 to Emilys List last year.

    Lol. Helping finance mediocrity at its best. Those idiots think they’re great because they sit on a toilet instead of standing up.

  35. .

    Do any bright sparks know by how much union/ALP joint campaigns like Your Rights at Work or ALP/DLP or Greens/Socialist Alliance electoral funding would be reduced by if union controlled compulsory super did not exist?

  36. twostix

    Do any bright sparks know by how much union/ALP joint campaigns like Your Rights at Work or ALP/DLP or Greens/Socialist Alliance electoral funding would be reduced by if union controlled compulsory super did not exist?

    Dot you can see the sort of cash flowing through Labors “associated entities” here:

    http://periodicdisclosures.aec.gov.au/SummaryAssociatedEntity.aspx

    Read it and weep. Check out the Canberra Labor Club – 74 million wtf.

    Notice how millions of dollars are funnelled through “Pulse”, an electronic payment company based in NSW.

  37. .

    Whom, may I ask, owns “Pulse”?

  38. twostix

    To directly answer your question check out United Voice’s return for 2010-2011.

    Australian Super gave United Voice over $300,000 in “sponsorship”, “directors fees”, and “research funding”.

    You think that’s bad?

    Host Plus gave them $649,000

    A million bucks in one year from Super Funds to a single union.

    That doesn’t count nearly a million dollars in Interest from Members Equity.

    http://periodicdisclosures.aec.gov.au/AssociatedEntity.aspx?SubmissionID=48&ClientID=18834

    They’ve got their own courts, their own laws, their own banks, their own tax system…

  39. twostix

    Whom, may I ask, owns “Pulse”?

    Brian Sherman, a radical animal rights activist / entrepreneur:

    http://www.smh.com.au/environment/entrepreneur-speaks-out-for-the-animals-20090430-anyt.html

  40. twostix

    A question, why do Industry Super Funds pay Directors Fees to the Union and not directly to the person?

    E.g “Kelly Shay” from United Voice got $30,000 from HESTA paid into the union account.

    Tax purposes?

  41. Scott

    Interestingly, the privatization of retirement savings was an idea applied in Chile in 1981 during reign of Pinochet. Inspiration was claimed to come from “Capitalism and Freedom” by Milton Friedman.

    Labor seems to leveraged off the same idea to get back door access to wage increases without impacting on reported inflation. Maybe Keating has Friedman in his bookshelf.

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