Sooper Dooper

The knives are out.  The battle for the people’s money has flared again.

Should the compulsory superannuation contribution increase from the current 9.5% to 12.0%?  And if yes, who pays for it.

The self interest brigade, the coalition of Industry Super is leading the charge but you know you got a problem when even the Grattan Institute is not on your side.

But statements like this show the what the battle is really about – and (hint hint) it is not a concern for the interest of retirees:

REST chief executive Vicky Doyle said an increase in contributions needed to occur so funds could recoup losses caused by the economic downturn and also the early release of super.

So the funds can recoup losses.  Not members.  Funds.

It’s all about the funds (ie managers) and not the members.  More funds under management = more fees = more power.

The members are just a means to the end and the ends have nothing to do with the welfare of members.

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31 Responses to Sooper Dooper

  1. notafan

    Recoup losses.

    Bizarre.

  2. Bruce

    Given that the entire “Super” caper was a way of “outsourcing” the problem of the terminal leakage of the original “pension” scheme, which was “originally” a taxpayer-funded “involuntary scheme” anyway, who DIDN’T expect this situation to arise?

    “COMPULSORY” Super is just another tax, at government gunpoint.

    Well may some say that with interest rates the way they are, Super is (was) a good deal. Righto, then.

    Let’s get real. Think of the WORST that can happen; then quadruple it. Let’s start with the three traditional “wild cards: Force majeure, Acts of War and “Acts of God”.

    Even if you “own” your principle residence “outright” , (check the laws on “property” in this country, VERY carefully). It can be “eminent-domained” out from under you at any time.

  3. H B Bear

    Look for the usual ticket clippers to be out in force – unions, overpaid index-clinging fund managers…

  4. Shy Ted

    In what I consider my own bizarre set of circumstances I applied for the $10k Covid release and ended up with the whole lot, every super $. Long story short, I resigned from my job and being older than the preservation age they insisted I was retired. Which I’m not. Ironically but actually deceptively I had had lengthy conversations with the super fund about how to access the lot and their answer was a categorical “not until you’re 67 under any circumstances”.

  5. H B Bear

    Beers are on Shy Ted.

  6. H B Bear

    Super is like the whales they used to drag up the ramp at Albany. Covered in shark bites.

  7. stackja

    Do Super Fund executives take salary cuts?

  8. rickw

    The less the better!

    Post me my beer Shy Ted!

  9. John Bayley

    @Shy Ted #3501338:

    Sounds whoever you talked to was rather confused. Mind you, this is quite common with the ‘specialists’ you get to talk to when you call the super fund.

    Here is how it works:

    – Age 60 & change your form of occupation: Your super accrued up to that point becomes ‘unrestricted & unpreserved’. In other words, you can access all of it as a lump sum or pension, tax-free.
    This sounds like it may have been your case; most people, including accountants, are not aware of this particular condition of release.

    – Age 65: Full access to super, regardless of whether you are still working or not.

    – Age 67: Eligibility age for Centrelink Age Pension (subject to asset and income testing). Nothing to do with superannuation.

  10. H B Bear

    Seems pretty straight forward. No wonder financial planners love this stuff.

  11. H B Bear

    Forgot the sarc/. Just like the tax system which sees most people use a tax agent.

  12. Mak Siccar

    Yet another strong argument for having one’s own SMSF, IMHO, but I realise that that is not for everyone. So far it has been financial decision I have made for a long while, even in these crazy times, but I understand that the unpredictability of the world financial system makes it nigh impossible for people like me well down the financial food chain to know what to do.

  13. tgs

    Compulsory super is the main reason why fund management/admin costs are an order of magnitude higher in Australia than the US.

    Make super voluntary and watch those fees fall.

  14. Bruce of Newcastle

    Seeing the punters crashed the ATO website yesterday trying to get their super money out, I suspect the men, women and yxes in the street have a low view of the unions managing their money.

    I’ve been amused by all the Industry Super Fund ads on tv lately. You can always tell patent medicine guys by their pitch.

  15. This is probably the only time I agree with the Grattan Institute on a matter of policy. The funds themselves should be ignored. One point should be cleared up, though – there is no question as to who pays for an increase – it is employees. The SG is sometimes described as tax like, but it’s not. For the bulk of the workforce earning above minimum wages, the increase is funded by reduced cash salary/wages, either immediately where possible, or over time if not. For the minimum wage group, and those unemployed by virtue of the minimum wage, even though they would be prepared to work, they pay for it in terms of increased unemployment. (BTW, I don’t think Grattan gets to the same conclusion as I do by the same route of argument. Instead they follow a meandering path down costs to the budget etc)

  16. stackja

    Fraser and Weaven worried?

  17. Archivist

    an increase in contributions needed to occur so funds could recoup losses

    Is that a pyramid scheme?
    Or is it just an instance of the old maxim “Don’t throw good money after bad”.
    Although, I guess, it’s in reverse: in the modern version, you are supposed to throw good money after bad.

  18. wal1957

    REST chief executive Vicky Doyle said an increase in contributions needed to occur so funds could recoup losses caused by the economic downturn and also the early release of super.

    Another graduate from the Emma Alberici school of economics perhaps?

  19. John Bayley

    Seems pretty straight forward. No wonder financial planners love this stuff.

    Is there anything these days that’s actually simple?
    Tax, super, estate planning, running a business?
    Mind you, *all* of this complexity is introduced by government edicts.
    It produces no value whatsoever and it most definitely does not lead to better outcomes overall.
    No wonder that, as per the IPA, red tape is now Australia’s biggest industry.

  20. John Bayley

    I understand that the unpredictability of the world financial system makes it nigh impossible for people like me well down the financial food chain to know what to do.

    If it makes you feel any better, I can tell you from first-hand experience that even the people at the top of the financial food chain – at least those ones who are honest about it – have no idea what’s going on at the moment and exactly where it will end up.
    Witness my other comment about Tesla now becoming the world’s biggest car maker by market cap – despite having less than 0.5% market share and never making a profit; ‘clean air credit’ accounting shenanigans notwithstanding.

  21. kae

    About 6 years ago I transferred $2,400 from a super fund I was in for about 18 months over 25 years ago into a fund which I have now been in for over 25 years.

    The total amount transferred over was about $1000.

    That is a rip off.

    Can’t remember if it was LG Super or Sun Super – probably Sun Super As I worked for an agency for almost a year in the early 90s.

  22. kae

    Oh.

    Very happy with UniSuper now.

  23. Rob MW

    REST chief executive Vicky Doyle said an increase in contributions needed to occur so funds could recoup losses caused by the economic downturn and also the early release of super.

    Ok, but if only employers could ………. but if only………. if only……… shit never mind !

  24. Leo G

    REST chief executive Vicky Doyle said an increase in contributions needed to occur so funds could recoup losses caused by the economic downturn …

    How do contributors recoup past losses by increasing contribution rates. Sounds like a pyramid scheme to conceal losses.

  25. Mark M

    Greg Combet is now in charge, advertising for superfund investments in seabreeze collectors.
    The peter principle in all its glory, coloured green for value adding.

  26. H B Bear

    Fraser and Weaven worried?

    No – cashed in and long gone. Only the mugs left.

  27. John A

    Leo G #3501524, posted on July 2, 2020 at 12:03 pm

    REST chief executive Vicky Doyle said an increase in contributions needed to occur so funds could recoup losses caused by the economic downturn …

    How do contributors recoup past losses by increasing contribution rates? Sounds like a pyramid scheme to conceal losses.

    Losses made in the past reduced the level of funds – otherwise, the assets under management would have been higher. So the “gimme, gimme” pitch is to top up the funds under management back to where they “should have been” if the losses had not occurred.

    It is all justified by projections forward to “expected balances at the end of members’ working lives.” If the funds have to provide projected figures of $X (millions) so members can maintain their former lifestyles, then “something must be done NOW!”

    What this displays (apart from the self-interest already noted) is that they are thinking as if superannuation is a Defined Benefit scheme (instead of an Accumulation Fund) and the shortfall is some kind of unfunded liability which has to be made good.

    That happens to auger well for self-interested policy recommendations, no?

  28. Shy Ted

    Thanks for explaining John Bayley. You get a free beer. Nothing for the other freeloaders.

  29. Neil

    that they are thinking as if superannuation is a Defined Benefit scheme

    Actually UniSuper still has a defined benefit scheme but it is not really one. All the old DBS’s gave you a pension for life and i don’t think are available anymore. UniSupers DBS should be really called a defined payout scheme. With this scheme you get a defined payout when you retire and if the share market crashes Unisuper is supposed to make up the difference.

    But since compulsory Super is a Labor idea i can see it not working in the long term. Not sure how but perhaps our debt gets so bad the govt may acquire peoples Super to pay off the govt debt

  30. Squirrel

    Lots of ullulation today about 400,000 Millenials having cleaned out their super – what a tragedy, it would have been so much better to keep it in the fund and spend it on a Winnebago and a European Cruise, or two, to qualify for the age pension in 30 years time.

  31. Penguinite

    Might have known the Irish Elf would be involved!

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