David Leyonhjelm on superannuation

The Government has pulled a swiftie on superannuation. In the May budget it proposed to increase tax on super by nearly $3 billion by 2020. Labor sniped at some design features but offered no real opposition and proposed its own increases of a similar amount.

The only opposition came from me and some Liberal Party backbenchers, encouraged by thousands of older Australians. Our pressure led the Government to revise its proposals. The effect of these revisions will be to increase tax on super even further, raising more than $3 billion by 2020.

The Liberal backbenchers have declared the revised plan a great victory. Let’s hope they realise their mistake, because with a few more ‘victories’ like that, everyone will be living on the pension in retirement.

The revised plan not only retains the cap of $1.6 million on funds in a pension account, in which earnings are tax free and no tax is paid on withdrawals, but makes it more difficult for anyone to reach that amount.

Those earning more than $250,000 in combined salary and super will now pay 30 per cent tax on their super contributions up to $25,000, while anyone making a contribution over $25,000 will see these contributions taxed at marginal tax rates. And in case you haven’t done the arithmetic, you’d need to contribute $25,000 every year for 64 years to reach $1.6 million.

The ban on lifetime post-tax contributions in excess of $500,000 has been dropped, replaced by a new ban on annual post-tax contributions in excess of $100,000, or $300,000 over three years for those under 65. Thus, anyone who comes into some money in excess of this, via an inheritance for example, will be unable to move it into super.

The plan to enable couples in their seventies to level their super accounts by allowing a husband to make contributions on his wife’s behalf is gone, as is the plan to allow non-salary superannuation contributions by people aged 65 to 74. Retirees will continue to be prevented from downsizing their home to put more of their wealth into super.

The plan to reduce the tax on catch-up contributions by mothers and carers returning to the workforce has been deferred. The earliest you could see a benefit from this is three years from now.

And to top it all off, there will now be a ban on putting any post tax money into super once your total balance exceeds $1.6 million. The previous plan was to allow such contributions but tax the earnings at 15 per cent, so people would continue to invest in their retirement.

The underlying problem is that, while a superannuation balance of $1.6 million might sound like a lot, it is not enough to retire on without the age pension. With low interest rates and the increased possibility of living for at least 30 years in retirement, $1.6 million might only buy an annuity starting at around $50,000, rising with inflation.

You could therefore go into retirement eligible for the age pension, which currently cuts out at income levels over $50,000. And even if you don’t start that way, you’ll become eligible for the age pension soon enough because the upper income limit for the age pension rises in line with wages growth, which is faster than inflation.

Unless interest rates increase substantially or we start dying earlier, a much higher super balance will be needed to ensure permanent ineligibility for the age pension. If there is no benefit in accumulating a super balance in excess of $1.6 million, there will be no incentive to become independent of the age pension.

That means the self-funded retiree will become a distant memory while the working age population will bear a crushing tax burden to pay for pensions.

The government intends to legislate the objective of superannuation as, “to provide income in retirement to substitute or supplement the Age Pension”, with all subsequent legislation assessed against this.

The problem is, its own plan fails the test. Private funds put aside for retirement should be seen as deferred consumption, not a honeypot for a tax-hungry government that cannot control its spending. If it was serious, the government would abandon its $3 billion super tax grab and boost incentives to save money for retirement, so more people were financially independent.

Raising taxes and promoting dependency is not the kind of swiftie we need.

David Leyonhjelm is a Senator for the Liberal Democrats

This entry was posted in Federal Politics, Finance, Guest Post, Taxation. Bookmark the permalink.

58 Responses to David Leyonhjelm on superannuation

  1. A Lurker

    Raising taxes and promoting dependency is not the kind of swiftie we need.

    A dependent population is a compliant population.
    Taxpaying slaves until we are too old, sick and broken down to work longer – pension slaves until we finally kick the bucket.
    Working as intended by the powers-that-be.

  2. Andrew

    I’m surprised in the debate around retrospectivity, what hasn’t been covered is that it’s simply horrific governance to change the rules in the middle of a financial year in a manner where people might have made arrangements. What if you committed to a drawdown-style fund on the basis of having to contribute post-tax to meet the obligations? What if you purchased a negatively geared property in your SMSF and have to make large contributions to fund it? What if you sold an investment property in the past 42 days with the intention of making the $560k contribution permitted on June 30th?

    I did tell Morrisson666 that if he thinks I have too much super, take me out of the SGC system and tell me not to contribute more. I didn’t say “do so without notice and leave me massively in the lurch.” Nor did I suggest that he expel “excess balances” that were generated lawfully from the pension system.

    And yes, the morons have been boasting on FB about their enormous win – instead of limiting my post-tax contributions to $200k under the original “retrospective” rule they have now limited me to $0. And want me to thank them for their lobbying efforts. Next time the back bench wants to help me, they can piss off and save themselves the trouble.

  3. john constantine

    Australias superannuation resources have already been committed to be consumed by the state.

    As the superannuation holders become diluted as a percentage of the voters influencing marginal electorates, the electoral advantage of using super money to buy votes becomes compelling.

    The spending locked in by Australian governments only becomes possible if super money and house prices become available to plug the gap.

    Already gone, every cent now put into super is simply a donation to future big government spending.

  4. Crossie

    Already gone, every cent now put into super is simply a donation to future big government spending.

    Even if it isn’t the confidence in it has been destroyed which will depress future contributions thus leading to its eventual extinction.

    There is nothing in this world that politicians cannot make worse.

  5. Rafe

    Bismark in Germany invented the welfare/warfare state to ensure a dependent and compliant population.

  6. Ant

    The bastards just can’t leave it alone.

  7. Boyfromtottenham

    Thanks for the update, Rafe, but I have a couple of quibbles. The first is your claim that it would take a person 64 years to ‘reach’ $1.6 million. This clearly ignores any returns (growth) in the fund and is quite misleading. A quick look at the historical returns from say Australian Super shows several years where the Balanced option earned more than 10, and up to 15 percent, and even higher for better growth options such as australian Shares. Secondly, you state that $1.6 million is insufficient to retire on. Again you appear to be assuming a very low rate of return indefinitely, which while true for some investment options in some years (check for yourself), is not true for all options in all years. This argument has been used widely by those arguing against the $1.6 million cap, but rarely refuted – perhaps because they are too lazy to dig out the facts, perhaps simply to mislead. I feel sorry for the average punter trying to manage their super and plan for retirement when faced with such a dearth of objective, factual analysis. The best thing I ever did for my super was to learn as much as I could about the options and make my own decisions based on hard facts, instead of believing anything that the ‘experts’ say. Nevertheless, I applaud your efforts in trying to improve an imperfect super system.

  8. Aristide

    The underlying problem is that, while a superannuation balance of $1.6 million might sound like a lot, it is not enough to retire on without the age pension

    Bullshit, Leyonhjelm. My super balance is a lot less than that, and I’m living comfortably. I’m also means tested as too wealthy for the pension.
    You views on super are about as rational as your opinions on gun ownership – both delusional.

  9. Boyfromtottenham

    P.S. Another quibble, Rafe, is that no mention is made of the fact that there are plenty of other ways for people to save for their retirement outside of the super system.

  10. rebel with cause

    Sounds like the strategy is to not make any voluntary contributions and over-invest in the family home.

  11. Baldrick

    Make no mistake, these are only the first forays into the big honey pot, this and successive governments will make.

    Leaving Super, as a retirement vehicle in the control of governments will only see more of your hard earned directed to welfare moochers who’ve decided not to invest in their retirement.

  12. Rafe Champion

    Quibbles have to be addressed to David L, I just post his fortnightly columns from the Fin Review.

  13. Tel

    My super balance is a lot less than that, and I’m living comfortably.

    Have you got enough to live comfortably another 30 years?

  14. Naed

    My super balance is a lot less than that, and I’m living comfortably.

    If you’re still living comfortably then this and successive governments obviously still has more room to tax. As Baldric observed they’ve just shown that it’s possible, it won’t be long until a green/labour coalition really let’s loose on the hard-earned, post tax savings to level the playing field.

  15. Atoms for Peace

    If politicians and public servants could only draw their lifetime pensions to the 1.6 mill mark, I’d think about it. Doesn’t it imply 3.5 mill plus for the pension stream that they receive ?

  16. Baldrick

    My super balance is a lot less than that, and I’m living comfortably.

    If you come off a low base to begin with, sure. One man’s comfort may be another man’s misery.

  17. RobK

    All valid points but the one that stands out for me is:
    …. and boost incentives to save money for retirement, so more people were financially independent.”
    I think it should read:
    “…. and boost incentives to save money for retirement, so more people were financially independent.”

  18. struth

    That means the self-funded retiree will become a distant memory while the working age population will bear a crushing tax burden to pay for pensions.

    What did the government do with all the tax those now pensioners paid all their life?
    I get your point, but this bullshit has got to stop.
    The young ones have to pay ONLY because the government wasted the taxes levied on those now requiring a pension.
    The government set up a big government socialist system that limited the earning capacity and wealth generation of millions of people, therefore limiting their income and the ability to pay more tax through more employed in the productive private sector.
    With good governance, forgetting super exists, a generation of taxpaying private sector workers, paying for a small and efficient government, would easily pay for their own pension, and be wealthy enough to get themselves set up for retirement, privately, with a small pension paid to those in need. It does no one any good setting generation against generation , this ” who pays for who” crap.
    D. L, this divisive intergenerational twaddle suits a defective, corrupt, bloated thieving government to remain defective, bloated, and thieving.
    Please think harder and so not let the brainwashing through tactical buzz phrases effect you.

  19. Mayan

    It amuses me that people have fought so hard to retain tax concessions on superannuation when it is entirely foreseeable that it will be plundered in the future. Of course, I was born cynical, but after what happened in Cyprus, perhaps people need to snap out of their starry-eyed romance with superannuation.

  20. Tel

    Better to have it plundered some time in the future, than plundered immediately.

  21. H B Bear

    Waffleworth and ScoMo have finally killed off what little belief remained in superannuation as a savings mechanism. Everyone was aware of the confiscation risk and rule changes – it took the Waffleworth Coalition Team to make them real. It doesn’t matter if they are forced to walk them back the genie is out of the bottle.The sheep know that the ALP will be worse once they get the chance.

  22. memoryvault

    it took the Waffleworth National Socialist Coalition Team to make them real.

    FIFY

  23. Empire GTHO Phase III

    It amuses me that people have fought so hard to retain tax concessions on superannuation when it is entirely foreseeable that it will be plundered in the future. Of course, I was born cynical, but after what happened in Cyprus, perhaps people need to snap out of their starry-eyed romance with superannuation.

    Effective twenty years ago. The problem is compulsion. I can’t opt out.

  24. memoryvault

    Effective twenty years ago. The problem is compulsion. I can’t opt out.

    The result was always entirely predictable, Empire. After all, it’s been done before.
    Australia had a compulsory super fund, the “Compulsory Contributions Scheme” (CCS).
    The pollies stole that one too, and finally repealed the legislation in September, 2014.
    Just in time to start stealing the next one. They even publicly spelled out how they intend to do it, in the “Government Response to the Murray Financial Review”, also back in 2014.

  25. Monkey's Uncle

    What did the government do with all the tax those now pensioners paid all their life?
    I get your point, but this bullshit has got to stop.
    The young ones have to pay ONLY because the government wasted the taxes levied on those now requiring a pension.

    Of course, the assumption is always that none of the people that benefited from or supported that past government spending end up with their hand out for the age pension or other concessions or spending in their old age. Apparently only people that live the most virtuous and responsible lives end up living to an old age and drawing government support in that old age. It really is magical thinking.

    Of course programs like the age pension would be a lot more sustainable if successive governments had done a better job of managing their budgets, run consistent surpluses, and saved money for future expenditures etc. Yet such policies are always difficult to sustain politically, as it is always easier for politicians that wish to be re-elected to office in the short term to shift more of the benefits of government activity into the near term and push out the costs into the longer term as much as possible.

    It does no one any good setting generation against generation , this ” who pays for who” crap.D. L, this divisive intergenerational twaddle suits a defective, corrupt, bloated thieving government to remain defective, bloated, and thieving.

    Intergenerational equity is almost entirely a product of big government. The existence of large government programs, regulatory distortions of the market, socialised risk and spending funded by debt etc. makes it a lot easier for successive generations to shift more costs on to subsequent generations or to game the system for their advantage. If the size of government had been much smaller all along, “intergenerational equity” would not even be an issue.

    As for it being divisive, claiming that something is divisive is too often a convenient excuse for ignoring or brushing under the carpet difficult issues. Sometimes harsh realities are divisive. But we shouldn’t just pretend they don’t exist.

  26. Monkey's Uncle

    It amuses me that people have fought so hard to retain tax concessions on superannuation when it is entirely foreseeable that it will be plundered in the future.

    True. How the elites must laugh. The prospect of paying less tax always has a powerful, irrational appeal to people. Although the people pushing hardest to retain tax concessions are generally those closer to retirement, who believe they can take their money out and enjoy it before the system is pillaged.

    What really amuses me is that on a so-called libertarian forum, there is so much support for retaining maximum tax concessions for superannuation. Tax concessions for super are a form of discriminatory taxation, with the government basically saying: ‘if you put your money in the government approved lock box, you will be taxed more leniently. If you choose to keep control of your own money and invest yourself, you will be taxed to the maximum extent’. Now what could be more libertarian than a system of discriminatory taxation that favours putting your money in a government approved lock box! It is precisely these types of arguments that promote the idea that so-called libertarians are a bunch of selfish frauds.

  27. memoryvault

    ‘if you put your money in the government approved lock box, you will be taxed more leniently. If you choose to keep control of your own money and invest yourself, you will be taxed to the maximum extent’.

    Thanks for that, Monkey. Now, if you could just direct me to the form that I have to fill out to exercise that choice, I’d be very grateful.

    PS – Could you also let me know where I lodge it?

    Thanks in advance.

  28. As every day passes, I begin to understand more clearly the importance of the US Second Amendment.
    As every day passes, I begin to understand more clearly the revolutionaries who took up arms.
    As every day passes, I begin to understand more clearly the grim satisfaction of seeing, at the base of a blood-stained and bullet-riddled wall, the lifeless bodies of those who would enslave others.
    As every day passes…

  29. Aristide

    As every day passes, I begin to understand more clearly the grim satisfaction of seeing, at the base of a blood-stained and bullet-riddled wall, the lifeless bodies of those who would enslave others.

    But those who enslaved 63,375Aussies between 1965 and 1972 have gotten away with it.

  30. struth

    As every day passes, I begin to understand more clearly the grim satisfaction of seeing, at the base of a blood-stained and bullet-riddled wall, the lifeless bodies of those who would enslave others.
    As every day passes…

    Are you quoting someone here or just “venting”

  31. Aristide

    Have you got enough to live comfortably another 30 years?

    My genes indicate that I’ll be lucky to make 80, so it’s not an issue.

  32. Aristide, when you are courageous enough to identify yourself, I will do you the courtesy fo a response, if in fact that is what you desire.

  33. Aristide

    Aristide, when you are courageous enough to identify yourself, I will do you the courtesy fo a response, if in fact that is what you desire.

    My identity is irrelevant to my post. You can please yourself about the response.

  34. My identity is irrelevant to my post. You can please yourself about the response.

    Coward

  35. Aristide

    What really amuses me is that on a so-called libertarian forum,

    What really amuses me is the lack of self-awareness of those who promote the accumulation of wealth by fair means or foul, as their raison d’etre, and get up in arms at anyone who stands in their way.
    As my maternal grandad used to say, “you’ve only got one mouth and one arsehole”
    You don’t need super balances in six figures to enjoy a reasonable quality of life. If you’re older than 70 (as I am) you should be grateful just to be alive.
    Anything beyond that you should give away, ideally to your kids.

  36. Rossini

    The underlying problem is that, while a superannuation balance of $1.6 million might sound like a lot, it is not enough to retire on without the age pension

    At return of 5% the 1.6mil equates to a tax free income of $80,000 with the capital intact.

    Come on who couldn’t survive on that.

    Excluding a return on your investment you could still draw down your capital & make it last the proverbial 30 years.

    Why do you expect taxpayers or those with minimal super balances to fund your kids inheritance!!!

  37. Monkey's Uncle

    @memoryvault (formerly known as the self-funded retiree who’ll never receive a pension)

    Obviously there are compulsory and non-compulsory super contributions. My point mainly relates to incentives to put more voluntary contributions into super.

    As for compulsory contributions from wage earners, it still doesn’t make sense from a supposedly “libertarian” position to concessionally tax compulsory contributions to the government lock box in relation to other forms of economic activity.

  38. memoryvault

    Obviously there are compulsory and non-compulsory super contributions. My point mainly relates to incentives to put more voluntary contributions into super.

    A distinction you failed to make the first time around.

    As for compulsory contributions from wage earners, it still doesn’t make sense from a supposedly “libertarian” position to concessionally tax compulsory contributions to the government lock box in relation to other forms of economic activity.

    It doesn’t make sense from any position to tax contributions at all, whether compulsory, or voluntary. If people’s efforts to provide for their old age are going to be taxed at all, it should be at the point of withdrawal, not contribution.

    There is no such thing as a “libertarian position” on compulsory super.

  39. RobK

    ….. it still doesn’t make sense from a supposedly “libertarian” position to concessionally tax compulsory contributions to the government lock box in relation to other forms of economic activity.x
    I think I see where you’re comming from. My take on this is that everyone should be encouraged to save (not just for retirement). The concept of the “lock box” as you say, is perhaps fair enough as an incentive to assist the “safety net” concept. The difficulty, as with any iron rule of regulation contender, is how do you revert to a sainer regulatory regime after leading so many up the garden path with their life savings. Encourage everyone to save equally. Retirement is not the only thing to save for.

  40. RobK

    I hasten to add…I’ve always despised the compulsory scheme from its inception.

  41. Aristide

    As every day passes, I begin to understand more clearly the grim satisfaction of seeing, at the base of a blood-stained and bullet-riddled wall, the lifeless bodies of those who would enslave others.

    Psychopath

  42. At return of 5% the 1.6mil equates to a tax free income of $80,000 with the capital intact.

    er… were are you getting 5%? try 2-3% and falling rapidly.

  43. Rossini

    Hey ZTP
    Excluding a return on your investment you could still draw down your capital & make it last the proverbial 30 years.

    Why do you expect taxpayers or those with minimal super balances to fund your kids inheritance!!!

    Do you know the average age of expiration of those nearing retirement. I guess it is no were near 95!!

    Why put all your retirement funds into super?
    Oh I forgot …..those with little or no super will fund your offsprings inheritance!

  44. BoyfromTottenham

    Zippy, as I mentioned in my first post above, a little effort will get you here:

    https://www.australiansuper.com/investments-and-performance/retirement-income-performance/investmentsperformancefytd.aspx, which shows that a pension from this public fund “Australian Shares” option has returned 7.2%year to date, whilst the “Balanced” option has returned 4%. There is plenty of the year left for it to do better than this, and if you take the trouble to click on “Select a Financial Year” and check the previous years returns you will see that the “Balanced” option has returned more than 10% several times in the past 10 years. I’m not spruiking this fund – I don’t work in the super or finance sector, and my pension is elsewhere, but I get tired of folk grizzling about poor super returns when this does match the facts. If your ‘financial adviser’ is telling you 2-3% is the best you can do, fire him!

  45. Monkey's Uncle

    I have a couple of quibbles. The first is your claim that it would take a person 64 years to ‘reach’ $1.6 million. This clearly ignores any returns (growth) in the fund and is quite misleading.

    So what are you saying here? That money invested often grows in value and generates an economic return over the life of the investment? That it doesn’t simply retain the value of when it was originally invested in perpetuity? Shit, that’s a bit of a nitpicking criticism surely!

    Besides, I don’t know if the principle of compound interest was discovered when the genius Leyonhjelm penned this piece/sarc

    FMD. The amount of transparently ignorant drivel that gets paraded as serious economic analysis nowadays really does my head in. Do people that stupid really deserve a decent retirement?

  46. Tel

    Encourage everyone to save equally. Retirement is not the only thing to save for.

    Sure, so what’s wrong with allowing interest rates to come up to a natural level (i.e. central bank becomes a genuine lender of LAST resort, which is not what they are doing at the moment) ? Be reasonable in how much to tax people, ensure strong respect for private property (no looting!) and make sure government is seen not to be wasteful… then many people will be willing to save. This is basic cause and effect.

    * If people see government is wasteful, and senior government staff perform poorly but get well paid, taxpayers will be resentful (e.g. ABS).

    * If taxes increase all the time and the taxpayers come to understand they are always the target, they will be both resentful and defensive.

    * If private property is regularly subject to confiscation, then immediate consumption makes more sense than trying to save or invest (you wouldn’t paint the house if you knew it was going to be taken from you next year).

    * If the return on savings is ultra-low the value of investing is reduced (especially with inflation causing a real return which is negative), thus no incentive to save.

    Compulsory Superannuation is an attempt to band-aid fix the problems caused by earlier bad government policies. This doesn’t matter for the people doing it, because it is yet another method of economic takeover by the central planners while under the cover of blaming everything on capitalism. There’s no particular mystery about what’s going on here.

  47. Tel

    There is no such thing as a “libertarian position” on compulsory super.

    I would argue there is a libertarian principle that any investment deal should be stable (i.e. not change around arbitrarily).

    Of course compulsory investment is hardly libertarian, but making a promise and then grabbing the loot after sucking people into it somehow seems like adding injury to insult.

  48. Monkey's Uncle

    memoryvault
    #2163036, posted on October 3, 2016 at 11:34 am

    There is no such thing as a “libertarian position” on compulsory super.

    The only truly libertarian position on compulsory super would be to oppose any compulsion. But the point remains: people that claim to be libertarians apparently support a system of discriminatory taxation where money invested in what is effectively a government lock box (sometimes based on compulsory contributions) is more favourably taxed compared to other economic activity. Again, there is nothing genuinely libertarian about this. Yet people around here that claim to be libertarians apparently support such a system.

    You want to nitpick around the edges, and ignore the substantive points. I can’t say I blame you. I’ve made a mess of you enough times on the substantive merits of these things, you really have little alternative but to be a bit more underhanded now.

  49. memoryvault

    Yet people around here that claim to be libertarians apparently support such a system.

    There a lot of people here who claim to be “libertarians” and aren’t, and many who claim libertarian support for something, where none exists. There cannot be a “libertarian” basis for the government to use compulsion with regards to other people’s money – eg savings.

    The irrelevant insults I’ll ignore.
    I have no problems with you being a legend in your own mind.

  50. RobK

    ” This is basic cause and effect.”
    Tel,
    I agree wholeheartedly with all of that, which you put very well. Thanks.

  51. Diogenes

    So what are you saying here? That money invested often grows in value and generates an economic return over the life of the investment? That it doesn’t simply retain the value of when it was originally invested in perpetuity? Shit, that’s a bit of a nitpicking criticism surely!

    Besides, I don’t know if the principle of compound interest was discovered when the genius Leyonhjelm penned this piece/sarc

    Monkeys Uncle…
    my super has only in the last FY regained the losses I made in my super in the GFC , yep 8 years of contributions & investment income to break even – woooohoooo!!!!

    Thinking back over my working life (started first real job in 1982) there have been 4 recessions, each of which would have wiped out many investment gains, and there were non recession years where fees & taxes exceeded investment income – and no not all of us have a choice where to put our super so a glib “move your money” is not the answer.

    DLs point is that even with investment income your initial years contributions may never make the 25k over the life of the super even counting the magic of compound interest – keeping the numbers round … assuming say a graduate whatever on 55k only “contributes” 5k , and an interest rate of 3.5% for say a 45 year contribution (I have chosen a reasonably conservative 3.5% because that will account the 15% tax on the income + fees + “compulsory” insurance that that it will accrue, AND years of losses ) and come out at 24k over the life of the investment. Assuming say a casual , like many starting out are, but with an annual salary of @25k (roughly what juniors working with Mrs D earned) , a contribution of 2300 , the same calculation it will at best yield 11k. To get the 25k return for that first year you would need a return of 5% each and every year exclusive of taxes, fees & insurance. It is true that in later years , the figures get better as a result as a result of increases in pay & therefore contributions may be balanced out by periods of unemployment & and the fewer years the money is invested

  52. George

    there will now be a ban on putting any post tax money into super once your total balance exceeds $1.6 million.

    That is completely false. Sure, criticise the policy. But the least you can do is understand what it actually says before you criticise it.

  53. Sydney Boy

    Has ScoMo and his band of merry retards considered the effect of pushing another 200,000 Australians onto a part-pension each year? The difference between no pension (relying entirely on super in retirements) and a $1 per fortnight part-pension is about $10,000 per year. Retirees on a pension, even as little as $1 per fortnight, are (currently) entitled to a bunch of price reductions including public transport, pharmaceuticals, council rates, drivers licenses, etc.

  54. Andrew

    there will now be a ban on putting any post tax money into super once your total balance exceeds $1.6 million.

    That is completely false. Sure, criticise the policy. But the least you can do is understand what it actually says before you criticise it.

    Could you explain that? It was my understanding too

  55. Duncan Spender

    Treasurer’s media release: “Individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional (after tax) contributions from 1 July 2017.”

  56. David Brewer

    A very thin article by Gottliebsen, which actually concedes that benefits are being trimmed for fatcats too:

    Currently, members of the $10 million club, and indeed all of those involved in the public service defined benefit scheme, can make contributions to a second fund — usually a self-managed fund. This will cease from July 1 2017.

    But he actually leaves out the main change. Retired politicians and public servants, who have always paid tax on their unfunded pensions, and who since 2007 received a 10% offset against this, will have the offset capped at $10K. This means that someone on, say, $200K pension will see their tax go up by $10K to about $60K. Ex-Vice-Chancellors etc. on $200K, whose pensions were funded and have thus been untaxed since 2007, will now have the portion over $100K taxed at half rate, i.e. lose about $20K.

    Yeah, I am not crying for them either, but it’s just not true that they are being let off scott-free. The tax grabs being applied to them are in fact quite comparable with the ripoffs being imposed on the rest of pensioners.

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