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Blog Post: Raising the Age of Retirement

By 15 April 2014 68

I should be up front. I’m one of those people (I imagine and hope we are very few) who spent their twenties and early thirties traveling the world, clocking up a solid log of fabulous experiences; sadly failing to accumulate any superannuation worth bragging about. So for me, I kind of know I’m going to be working, or attempting to work for as long as my bones will hold me up.

My father on the other hand has worked hard for more than 55 years now and at 73 is being forced into retirement, as jobs are hard to come by. All around who love and cherish him tell him he’s earned a break, along with the fairly measly pension that goes with it. But, he wants to keep working because he feels he can, even though he can essentially afford to retire.

With this in mind, I can’t help but wonder how raising the retirement age would actually work. What would it look like? In Singapore, where government supported retirement is nonexistent, there are a plethora of jobs seemingly created for the older generation. Not too physically demanding but enough to keep a small income coming in (in a country where the cost of living is on the increase this hardly covers basic needs, but the idea and infrastructure is there). Yet here we are automating as much as possible. When was the last time anyone saw a tea lady come around the office? Or, a janitor permanently on site to take care of things like spills and basic repair?

I heard something on the radio today about women in their 60s becoming an increasing population within the homeless. Mostly women who have lead their lives traditionally, taking care of a family, raising children, playing by the ‘rules’ – only to be left potentially with a broken marriage, no super and in many cases it would seem, no home. How do we expect these women to work until they’re 70 when they can’t find work in their 60s?

When was the last time your workplace employed someone new to the company who was over 60, or even 55?

To me, this is simply a shift away from paying a pension, toward potentially paying the dole. For people who have worked all their lives, played by the rules and contributed to the economy with taxes and required consumer behaviours, is that really a way for them to end their working lives? Would that merely add a bill for the mental anxiety and depression that would be likely to follow?

This is a cultural change and one that would need incentives for businesses to employ more experienced employees at times when they would traditionally be winding down their working patterns.

It may be a way of the future, but how much would need to change to make it viable? And how do we get onto it? I need to be working for a long time!

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68 Responses to Blog Post: Raising the Age of Retirement
#1
bd849:09 am, 15 Apr 14

You’re actually talking about the pension age, not the retirement age. You can retire whenever you want to, depending on your financial situation to live comfortably.

The pension was established back in the early 1900s when the life expectancy age was about 65 and never took into account the population spike from baby boomers when introduced, so it is an expensive and inefficient scheme.

The talk about raising the age to 70 is built on hype. It will be 3 years more than the age of 67 which will begin to increase from 2017 to 2023 introduced by the Labor government. Any increase to 70 would likely be seen from about 2025.

People haven’t yet cottoned on to the fact that one day, there will be no aged pension. Superannuation was established for self funding retirement and reduce people’s dependency on the government pension. Raising the pension age won’t have a significant impact on those that have been contributing well to their super.

The main issue for the increased pension age is that the superannuation system needs to be reformed to allow people to contribute more pretax dollars to their super without being taxed to the extreme after $25k. If people can accelerate their self payments, then for most people the pension age will be irrelevant. For those who can’t afford it and cannot continue working, there will always be some other form of government financial support.

#2
neanderthalsis10:21 am, 15 Apr 14

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

As BD84 stated, the change is to the Aged Pension age, not the retirement age. You can retire whenever you want provided you can support yourself. This is why I, at the ripe old age of 35, am putting extra into my super.

As for age suitable jobs, the labour market has seen a structural shift from manufacturing/manual work to predominantly service work. I don’t think any one would expect someone to be laying bricks into their 70′s but serving behind a counter is more than achievable for most.

#3
VYBerlinaV8_is_back11:39 am, 15 Apr 14

At some point the government needed to do this, and there will be more to come. Watch for changes in the next few years to superannuation rules to prevent access prior to age 70 also.

As a country, we simply can’t afford to pay this much welfare. Especially given the tax breaks that are given to superannuation.

I have been planning for early retirement since my mid twenties. I would encourage others to start planning (or ramp up ) at whatever age they are. In 30 years time, there may not be a pension at all.

#4
dungfungus1:41 pm, 15 Apr 14

You have answered your own question in the first paragraph.
Providing sufficient capital for one’s retirement is a choice. Sacrifices have to be made.
Most people I know who have become unemployed at an age over 50 are either still unemployed or they have become self-employed. Your assessment of the absence of 55 year olds and over in the workplace (other than self-employed) is spot on.
Post #1 has already sussed out what is going to happen and while correctly pointing out that the annual maximum concessional contibution limit is only $25k, a combination of employer funded contributions and self-contribution (another sacrifice) up to the limit is still the best way to accumulate sufficient capital to live with dignity in retirement without any assistance from the government.

#5
dungfungus2:05 pm, 15 Apr 14

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

As BD84 stated, the change is to the Aged Pension age, not the retirement age. You can retire whenever you want provided you can support yourself. This is why I, at the ripe old age of 35, am putting extra into my super.

As for age suitable jobs, the labour market has seen a structural shift from manufacturing/manual work to predominantly service work. I don’t think any one would expect someone to be laying bricks into their 70′s but serving behind a counter is more than achievable for most.

It is simply not true to suggest most baby-boomers will “blow” their superannuation and then live on the pension. Most baby-boomers are thrifty when compared to the demographic groups following them.
Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice? Also, self employed people running their businesses outside a corporate structure were discriminated against when it came to the maximum concessional contributions allowed.

#6
VYBerlinaV8_is_back2:35 pm, 15 Apr 14

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

As BD84 stated, the change is to the Aged Pension age, not the retirement age. You can retire whenever you want provided you can support yourself. This is why I, at the ripe old age of 35, am putting extra into my super.

As for age suitable jobs, the labour market has seen a structural shift from manufacturing/manual work to predominantly service work. I don’t think any one would expect someone to be laying bricks into their 70′s but serving behind a counter is more than achievable for most.

It is simply not true to suggest most baby-boomers will “blow” their superannuation and then live on the pension. Most baby-boomers are thrifty when compared to the demographic groups following them.
Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice? Also, self employed people running their businesses outside a corporate structure were discriminated against when it came to the maximum concessional contributions allowed.

I agree. This myth that the baby boomers are somehow more financially profligate than Gen X or Y is ridiculous.

#7
bigred5:59 pm, 15 Apr 14

“aged pension”? What law is that paid under because I cannot find it?

#8
milkman6:17 pm, 15 Apr 14

VYBerlinaV8_is_back said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

As BD84 stated, the change is to the Aged Pension age, not the retirement age. You can retire whenever you want provided you can support yourself. This is why I, at the ripe old age of 35, am putting extra into my super.

As for age suitable jobs, the labour market has seen a structural shift from manufacturing/manual work to predominantly service work. I don’t think any one would expect someone to be laying bricks into their 70′s but serving behind a counter is more than achievable for most.

It is simply not true to suggest most baby-boomers will “blow” their superannuation and then live on the pension. Most baby-boomers are thrifty when compared to the demographic groups following them.
Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice? Also, self employed people running their businesses outside a corporate structure were discriminated against when it came to the maximum concessional contributions allowed.

I agree. This myth that the baby boomers are somehow more financially profligate than Gen X or Y is ridiculous.

+1.

#9
JustThinking6:24 pm, 15 Apr 14

Hiya,
You say “But, he wants to keep working because he feels he can, even though he can essentially afford to retire.”

So the money or pension etc isn’t the issue, it’s just he wants to keep working.
Can’t he volunteer somewhere?
Most places are screaming for volunteers.

#10
mmillercfp6:29 pm, 15 Apr 14

bigred said :

“aged pension”? What law is that paid under because I cannot find it?

The age pension is paid under the Social Security Act 1991 which you can find at http://www.austlii.edu.au/au/legis/cth/consol_act/ssa1991186/index.html – it’s a joy to read!

#11
morethanmumma7:15 pm, 15 Apr 14

I fully accept that there is unlikely to be a pension by the time I retire. And I agree that baby boomers are generally a far more frugal generation to my x-ers (my parents certainly wouldn’t have jetted off around the world without feeling financially stable first…). I guess my concern is primarily around the community and cultural adaption to the laws. My dad (and many of his generation) completely links a great deal of himself and his self worth to contribution through work. I just wonder how a raised pension (to his mind, retirement) age would further impact his struggle to feel valuable in older age. I worry that more people feeling like they have to work (and for those without suitable super who do need to work) will be faced with nobody willing to employ them.

#12
JustThinking7:46 pm, 15 Apr 14

morethanmumma said :

I fully accept that there is unlikely to be a pension by the time I retire. And I agree that baby boomers are generally a far more frugal generation to my x-ers (my parents certainly wouldn’t have jetted off around the world without feeling financially stable first…). I guess my concern is primarily around the community and cultural adaption to the laws. My dad (and many of his generation) completely links a great deal of himself and his self worth to contribution through work. I just wonder how a raised pension (to his mind, retirement) age would further impact his struggle to feel valuable in older age. I worry that more people feeling like they have to work (and for those without suitable super who do need to work) will be faced with nobody willing to employ them.

What is wrong with helping others?
If someone needs to feel valuable, then helping less fortunate is certainly one way to do it.
There are plenty of other people out there that have it worst off that could use a hand.

If money is an issue… then there are many options.

Times might get tough but they get tough for everyone, not just retirement aged people.

#13
banco8:02 pm, 15 Apr 14

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

#14
dungfungus8:25 pm, 15 Apr 14

The sleeper that everyone has forgotten about is a change in legislation of funds controlled by APRA which will abolish lump sum payouts and “convert” fund balances to allocated pensions.
Unless this happens there is a probability that, in the event of a financial crisis requiring contributors to access their funds, the funds will not have the “on call” liquidity to meet demands. Large funds are now investing more long term in infrastrcture which makes it impossible for them to sell these assets quickly and the only entity that will be able to buy them is another large super fund. A “run” on some of these funds could render them insolvent and who knows where that would lead. It may give a government of the day an excuse to nationalise all super funds. Don’t dismiss this possibility; it has already happened in Argentina and Hungary.

#15
bigred9:10 pm, 15 Apr 14

mmillercfp said :

bigred said :

“aged pension”? What law is that paid under because I cannot find it?

The age pension is paid under the Social Security Act 1991 which you can find at http://www.austlii.edu.au/au/legis/cth/consol_act/ssa1991186/index.html – it’s a joy to read!

Glad you cleared that up. Now drop the “d” folks!

#16
dungfungus9:56 pm, 15 Apr 14

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

#17
chewy1410:58 pm, 15 Apr 14

VYBerlinaV8_is_back said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

As BD84 stated, the change is to the Aged Pension age, not the retirement age. You can retire whenever you want provided you can support yourself. This is why I, at the ripe old age of 35, am putting extra into my super.

As for age suitable jobs, the labour market has seen a structural shift from manufacturing/manual work to predominantly service work. I don’t think any one would expect someone to be laying bricks into their 70′s but serving behind a counter is more than achievable for most.

It is simply not true to suggest most baby-boomers will “blow” their superannuation and then live on the pension. Most baby-boomers are thrifty when compared to the demographic groups following them.
Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice? Also, self employed people running their businesses outside a corporate structure were discriminated against when it came to the maximum concessional contributions allowed.

I agree. This myth that the baby boomers are somehow more financially profligate than Gen X or Y is ridiculous.

Whether they spend more or not is questionable but there’s no doubt that a common occurence upon retirement is to spend large amounts of capital (often on the family home which isn’t included in the assets test) to maximise the pension amount available.

The pension needs to transition to only being available for those who truly can’t look after themselves. It’s welfare, it’s the old person’s dole. It’s not a government bank account that you deserve to draw from because ‘i paid tax and stuff’. An easy change is including the value of the family home in the assets test and tightening that test. Why should taxpayers be basically funding other people’s inheritances?

With regards to super, the concessions that are (and were) available are increasingly affecting the budgets bottom line and their effectiveness and fairness need to be debated. They were designed to help people save for their retirements but at some point those concessions will cost more than it would cost to simply pay the pension to everybody.
The tax free status for over 60′s needs to be looked at. Why should their earnings be tax free, while younger workers (who may be worse off financially) pay the full rates?

And ill add a postscript to the above that I personally use those super concessions to the full amount legally allowed. But I truly believe that the government cannot afford to operate the way it is and the intergenerational theft must stop.

#18
chewy1411:33 pm, 15 Apr 14

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

So paying some tax during one part of your life excuses you from paying tax during another part of your life?

Interesting, I’m sure Gina Rinehart has paid enough tax for her life, would you allow her to go tax free for the rest of it simply because she’s already chipped in?

Also, a single home owner can have $750k of assets, not including their home and still receive a part pension. For couples that amount is $1.1million. At present, its highly likely that the self funded retiree with $1 million in Super will access at least a part pension at some stage of their retirement.

Oh and can you explain to me where you got your $200k and $300k contribution and earnings tax amounts from?

#19
chewy1411:37 pm, 15 Apr 14

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

Stupid quotes, hopefully fixed.

So paying some tax during one part of your life excuses you from paying tax during another part of your life?

Interesting, I’m sure Gina Rinehart has paid enough tax for her life, would you allow her to go tax free for the rest of it simply because she’s already chipped in?

Also, a single home owner can have $750k of assets, not including their home and still receive a part pension. For couples that amount is $1.1million. At present, its highly likely that the self funded retiree with $1 million in Super will access at least a part pension at some stage of their retirement.

Oh and can you explain to me where you got your $200k and $300k contribution and earnings tax amounts from?

#20
banco11:40 pm, 15 Apr 14

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

Sorry bud don’t think that will be enough to keep your fellow baby boomers in the style they’ve become accustomed to. You’re going to have to cough up some of that super money.

#21
bikhet6:50 am, 16 Apr 14

chewy14 said :

But I truly believe that the government cannot afford to operate the way it is and the intergenerational theft must stop.

You may be right that the government cannot afford to operate the way it is, but I’m getting tired of this simplistic view of intergenerational transfers. To look at things in a different way (also simplistic as it’s too early in the morning), the baby boomers subsidised the education of Gen X, Y, whatever and so might expect some return on their investment in the form of assistance in retirement. This could be expanded to give a more complete view of the balance sheet, but, as I said, it’s too early.

#22
dungfungus8:03 am, 16 Apr 14

chewy14 said :

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

Stupid quotes, hopefully fixed.

So paying some tax during one part of your life excuses you from paying tax during another part of your life?

Interesting, I’m sure Gina Rinehart has paid enough tax for her life, would you allow her to go tax free for the rest of it simply because she’s already chipped in?

Also, a single home owner can have $750k of assets, not including their home and still receive a part pension. For couples that amount is $1.1million. At present, its highly likely that the self funded retiree with $1 million in Super will access at least a part pension at some stage of their retirement.

Oh and can you explain to me where you got your $200k and $300k contribution and earnings tax amounts from?

You didn’t read my post very well did you?
I’ll repeat that a self-funded retiree doesn’t draw down a pension from the taxpayers which could total $400,000 for the rest of life ($20,000pa x 20 years). A 65yo self-funded retiree may live another 20 years after paying income tax and taxes associated with provision for their superannuation in retirement for at least 45 years. I think that is a very fair deal for the rest of the community.
I wish you angry socialists would stop trotting out Gina Rinehart – her situation really has nothing to do with this. I don’t cite ex-PM Julia Gillard’s massive taxpayer funded pension and benefits and her recent purchase of a multi million dollar beachside house in Adelaide do I? At least Rinehart uses her own money.
The asset test for age pension applies equally to all people. You didn’t add that a pension age couple can earn up to about $70,000 pa tax free from any investment stream as well as non-taxable income from a superannuation fund in pension mode. This makes them ineligble for any supplementary age pension income.
My calculations for contibutions tax of about $200,000 are based on gross contributions of about $1.3m @ 15% =$195,000 which leaves net contributions of $1.105m in the fund.
The earnings of the fund are taxed @ 30% and the fund should earn an average of 10%pa so at least $300,000 is paid on earnings of the fund over 30 – 40 years.
There was also a period under the Howard governmnet when there was a very punitive Superannuation Surchage Levy (socialists love this sort of thing) which raised millions of dollars from people who were determined to become self-funded retirees.

#23
dungfungus8:09 am, 16 Apr 14

banco said :

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will live into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

Sorry bud don’t think that will be enough to keep your fellow baby boomers in the style they’ve become accustomed to. You’re going to have to cough up some of that super money.

How is it going to help your socialst goals if self-funded retirees have to surrender their already taxed savings to others who chose to rely on the government to sustain them post age pension?
All it means is that another person who wasn’t being funded by the taxpayer will have to go on the taxpayer funded pension as well. This is where socialism fails badly.

#24
VYBerlinaV8_is_back12:05 pm, 16 Apr 14

An interesting idea I heard recently was to change the superannuation system such that:
* Contributions up to a set limit (say $30,000) are made tax free.
* Any earnings within the fund are tax free.
* Any benefits received from the fund (ie lump sum withdrawals or pension) are treated as regular income for tax purposes, with no concessions given.

We’d collect a bit less tax now, but more later. There’d also be more money within the super funds for investment.

#25
chewy1412:38 pm, 16 Apr 14

dungfungus said :

chewy14 said :

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will livwe into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

Stupid quotes, hopefully fixed.

So paying some tax during one part of your life excuses you from paying tax during another part of your life?

Interesting, I’m sure Gina Rinehart has paid enough tax for her life, would you allow her to go tax free for the rest of it simply because she’s already chipped in?

Also, a single home owner can have $750k of assets, not including their home and still receive a part pension. For couples that amount is $1.1million. At present, its highly likely that the self funded retiree with $1 million in Super will access at least a part pension at some stage of their retirement.

Oh and can you explain to me where you got your $200k and $300k contribution and earnings tax amounts from?

You didn’t read my post very well did you?
I’ll repeat that a self-funded retiree doesn’t draw down a pension from the taxpayers which could total $400,000 for the rest of life ($20,000pa x 20 years). A 65yo self-funded retiree may live another 20 years after paying income tax and taxes associated with provision for their superannuation in retirement for at least 45 years. I think that is a very fair deal for the rest of the community.
I wish you angry socialists would stop trotting out Gina Rinehart – her situation really has nothing to do with this. I don’t cite ex-PM Julia Gillard’s massive taxpayer funded pension and benefits and her recent purchase of a multi million dollar beachside house in Adelaide do I? At least Rinehart uses her own money.
The asset test for age pension applies equally to all people. You didn’t add that a pension age couple can earn up to about $70,000 pa tax free from any investment stream as well as non-taxable income from a superannuation fund in pension mode. This makes them ineligble for any supplementary age pension income.
My calculations for contibutions tax of about $200,000 are based on gross contributions of about $1.3m @ 15% =$195,000 which leaves net contributions of $1.105m in the fund.
The earnings of the fund are taxed @ 30% and the fund should earn an average of 10%pa so at least $300,000 is paid on earnings of the fund over 30 – 40 years.
There was also a period under the Howard governmnet when there was a very punitive Superannuation Surchage Levy (socialists love this sort of thing) which raised millions of dollars from people who were determined to become self-funded retirees.

No, I read your post fine. And as for me being a socialist, lol. I’m the one arguing to cut the socialist policies of giving welfare to those who don’t need it. I’m promoting individual responsibility whilst youre saying that younger taxpayers should be handing over tax dollars at higher rates than older, well off people.

Now to your maths.
Firstly, if a person has $1 million in Super, unless their fund earned 0% they haven’t contributed $1million dollars. And if they had contributed $1million to their fund and it was earning 10% pa as you’ve assumed, their Super would be significantly higher than that $1million. You’re trying to double count their tax contribution or understate their actual Super balance. Tax on earnings is also 15% not 30% as you’ve assumed.

And you didn’t answer my question with regards to tax. Why should Super earnings from a potentially well off retiree be tax free whilst younger people pay the full rate? Do you think ‘ive already chipped in’ is a valid excuse to not pay tax at another time in your life?

And why should taxpayers be funding the inheritances of the children of home owning pensioners when the pensioner clearly has enough assets to look after themselves. The government should be recovering any benefits paid from their estate.

Just because a rule is the same for everyone doesn’t mean everyone has equal access to it or that its fair or equitable in any way. The assets tests for the pension clearly need to be tightened and the rules around Super reviewed.

#26
dungfungus12:53 pm, 16 Apr 14

VYBerlinaV8_is_back said :

An interesting idea I heard recently was to change the superannuation system such that:
* Contributions up to a set limit (say $30,000) are made tax free.
* Any earnings within the fund are tax free.
* Any benefits received from the fund (ie lump sum withdrawals or pension) are treated as regular income for tax purposes, with no concessions given.

We’d collect a bit less tax now, but more later. There’d also be more money within the super funds for investment.

That sounds like the way defined benefit schemes (non-contributory) operate now.
Nertheless I can see merit in that as long as I get back the 15% contibutions tax I have already paid. Existing funds could be grandfathered I guess.
While you say there would be more money in the funds for investment don’t forget it could be more money to lose also.

#27
watto234:43 pm, 16 Apr 14

chewy14 said :

dungfungus said :

chewy14 said :

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will livwe into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

Stupid quotes, hopefully fixed.

So paying some tax during one part of your life excuses you from paying tax during another part of your life?

Interesting, I’m sure Gina Rinehart has paid enough tax for her life, would you allow her to go tax free for the rest of it simply because she’s already chipped in?

Also, a single home owner can have $750k of assets, not including their home and still receive a part pension. For couples that amount is $1.1million. At present, its highly likely that the self funded retiree with $1 million in Super will access at least a part pension at some stage of their retirement.

Oh and can you explain to me where you got your $200k and $300k contribution and earnings tax amounts from?

You didn’t read my post very well did you?
I’ll repeat that a self-funded retiree doesn’t draw down a pension from the taxpayers which could total $400,000 for the rest of life ($20,000pa x 20 years). A 65yo self-funded retiree may live another 20 years after paying income tax and taxes associated with provision for their superannuation in retirement for at least 45 years. I think that is a very fair deal for the rest of the community.
I wish you angry socialists would stop trotting out Gina Rinehart – her situation really has nothing to do with this. I don’t cite ex-PM Julia Gillard’s massive taxpayer funded pension and benefits and her recent purchase of a multi million dollar beachside house in Adelaide do I? At least Rinehart uses her own money.
The asset test for age pension applies equally to all people. You didn’t add that a pension age couple can earn up to about $70,000 pa tax free from any investment stream as well as non-taxable income from a superannuation fund in pension mode. This makes them ineligble for any supplementary age pension income.
My calculations for contibutions tax of about $200,000 are based on gross contributions of about $1.3m @ 15% =$195,000 which leaves net contributions of $1.105m in the fund.
The earnings of the fund are taxed @ 30% and the fund should earn an average of 10%pa so at least $300,000 is paid on earnings of the fund over 30 – 40 years.
There was also a period under the Howard governmnet when there was a very punitive Superannuation Surchage Levy (socialists love this sort of thing) which raised millions of dollars from people who were determined to become self-funded retirees.

No, I read your post fine. And as for me being a socialist, lol. I’m the one arguing to cut the socialist policies of giving welfare to those who don’t need it. I’m promoting individual responsibility whilst youre saying that younger taxpayers should be handing over tax dollars at higher rates than older, well off people.

Now to your maths.
Firstly, if a person has $1 million in Super, unless their fund earned 0% they haven’t contributed $1million dollars. And if they had contributed $1million to their fund and it was earning 10% pa as you’ve assumed, their Super would be significantly higher than that $1million. You’re trying to double count their tax contribution or understate their actual Super balance. Tax on earnings is also 15% not 30% as you’ve assumed.

And you didn’t answer my question with regards to tax. Why should Super earnings from a potentially well off retiree be tax free whilst younger people pay the full rate? Do you think ‘ive already chipped in’ is a valid excuse to not pay tax at another time in your life?

And why should taxpayers be funding the inheritances of the children of home owning pensioners when the pensioner clearly has enough assets to look after themselves. The government should be recovering any benefits paid from their estate.

Just because a rule is the same for everyone doesn’t mean everyone has equal access to it or that its fair or equitable in any way. The assets tests for the pension clearly need to be tightened and the rules around Super reviewed.

Yeah this I’ve chipped in is rubbish, especially when those lower paid workers were the ones earning money to help pay their larger wages. I’m all for trying to find a way to self fund retirement, but using the words like socialist, just shows someone has a political bias and is anti anything slightly left of the far right of the political spectrum.

So its ok to try and get lower paid workers to work for you and maximise your earnings, and then you want to rub your hands clean of helping fund a retirement for them as well? If anything the lower paid you are the less tax on putting money into super should be applied. It gives incentives for lower paid workers to save for retirement. I know policies that give incentives to the lower class is not want the right want to do. They want to keep them where they are now, blame the socialist scum and make it look like they had there best interests at heart so they’ll vote for them again.

#28
dungfungus6:36 pm, 16 Apr 14

chewy14 said :

dungfungus said :

chewy14 said :

dungfungus said :

banco said :

dungfungus said :

neanderthalsis said :

The Aged Pension was originally established in 1909 and set at age 65, which was then three years older than the average life expectancy. Roll forward 105 years and there is a very real prospect that most of us will livwe into our 90′s, potentially spending 30 odd years on the government teat is we leave the workforce at 65.

The former Labor government introduced a creep of the aged pension age to 67 by 2029, by which time pretty much all baby boomers will be out of the workforce and will have blown their superannuation on a flash new caravan and by living free and easy at taxpayer expense.

Nor is it correct to repeat the socialist inspired mantra that self-funded retirees have excessive tax breaks. Remember, most self-funded retirees contibuted their own superannuation money and paid contibutions tax on it so why should they be taxed twice?

Because they should chip in to pay for the millions of their fellow baby boomers who aren’t going to be self funded or do you think the young should pay for them?

If someone accumulated $1 million in self-funded super during their working life they would have paid nearly $200,000 in contributions tax and another $300,000 in fund earning tax before the fund went into tax-free pension mode.
This alone should be a big enough “chip in” don’t you think?
As well as that, self-funded retirees will not be holding their hands out for a $400,000 taxpayer funded pension for the next 20 years of their life.

Stupid quotes, hopefully fixed.

So paying some tax during one part of your life excuses you from paying tax during another part of your life?

Interesting, I’m sure Gina Rinehart has paid enough tax for her life, would you allow her to go tax free for the rest of it simply because she’s already chipped in?

Also, a single home owner can have $750k of assets, not including their home and still receive a part pension. For couples that amount is $1.1million. At present, its highly likely that the self funded retiree with $1 million in Super will access at least a part pension at some stage of their retirement.

Oh and can you explain to me where you got your $200k and $300k contribution and earnings tax amounts from?

You didn’t read my post very well did you?
I’ll repeat that a self-funded retiree doesn’t draw down a pension from the taxpayers which could total $400,000 for the rest of life ($20,000pa x 20 years). A 65yo self-funded retiree may live another 20 years after paying income tax and taxes associated with provision for their superannuation in retirement for at least 45 years. I think that is a very fair deal for the rest of the community.
I wish you angry socialists would stop trotting out Gina Rinehart – her situation really has nothing to do with this. I don’t cite ex-PM Julia Gillard’s massive taxpayer funded pension and benefits and her recent purchase of a multi million dollar beachside house in Adelaide do I? At least Rinehart uses her own money.
The asset test for age pension applies equally to all people. You didn’t add that a pension age couple can earn up to about $70,000 pa tax free from any investment stream as well as non-taxable income from a superannuation fund in pension mode. This makes them ineligble for any supplementary age pension income.
My calculations for contibutions tax of about $200,000 are based on gross contributions of about $1.3m @ 15% =$195,000 which leaves net contributions of $1.105m in the fund.
The earnings of the fund are taxed @ 30% and the fund should earn an average of 10%pa so at least $300,000 is paid on earnings of the fund over 30 – 40 years.
There was also a period under the Howard governmnet when there was a very punitive Superannuation Surchage Levy (socialists love this sort of thing) which raised millions of dollars from people who were determined to become self-funded retirees.

No, I read your post fine. And as for me being a socialist, lol. I’m the one arguing to cut the socialist policies of giving welfare to those who don’t need it. I’m promoting individual responsibility whilst youre saying that younger taxpayers should be handing over tax dollars at higher rates than older, well off people.

Now to your maths.
Firstly, if a person has $1 million in Super, unless their fund earned 0% they haven’t contributed $1million dollars. And if they had contributed $1million to their fund and it was earning 10% pa as you’ve assumed, their Super would be significantly higher than that $1million. You’re trying to double count their tax contribution or understate their actual Super balance. Tax on earnings is also 15% not 30% as you’ve assumed.

And you didn’t answer my question with regards to tax. Why should Super earnings from a potentially well off retiree be tax free whilst younger people pay the full rate? Do you think ‘ive already chipped in’ is a valid excuse to not pay tax at another time in your life?

And why should taxpayers be funding the inheritances of the children of home owning pensioners when the pensioner clearly has enough assets to look after themselves. The government should be recovering any benefits paid from their estate.

Just because a rule is the same for everyone doesn’t mean everyone has equal access to it or that its fair or equitable in any way. The assets tests for the pension clearly need to be tightened and the rules around Super reviewed.

Re my maths.
The contributions tax is calculated against contributions only – I made this quite clear and calculated the tax that would be paid if a total of about $1m net was paid by contributions over a number of years.
Investment earnings (i.e. dividends, interest earned, rental income etc.) are taxed at a flat rate of 15% within the superannuation fund. In addition where an investment is sold within 12 months (eg share trading), Capital Gains Tax is payable by the superannuation fund at 15% also. 15% + 15% = 30%.
Re young people paying the full rate as against old retirees paying nothing, you don’t seem to understand the difference between the two. The younger ones are still contributing wheras the retirees are receiving pensions. The retirees also paid the “full rate” when they were contributing.
You seem to have a fixation about pensioners owning their own home and to suggest taxpayers are funding the inheritance of pensioners’ children is nonsense.

#29
Masquara7:22 pm, 16 Apr 14

Riotact, you really should take note of John Griffiths’ excellent and tight editorial policies – you didnt’ notice? Riotact thrived because only local-interest posts got through. If JB posted something that wasn’t Canberra & region local, he would be asked to defend that editorial decision. And he ALWAYS had thought it through. Posts on federal issues such as this one take oxygen from the site and end up a boring duplication of what’s available in the mainstream media. In all seriousness, if you don’t have a “local news” policy and stick to it, Riotact will become totally irrelevant. If you are going to allow Riotact to become a free-for-all, any-issues site, I’m out of here. Can you advise your policies? Thank you!

#30
Pork Hunt8:26 pm, 16 Apr 14

Hey Masquara, last time I looked, Parliament House was in Canberra. If things happen in that place then they are “local” or would you like to see the triangle excised from mainland Australia?

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