Blog Post: Raising the Age of Retirement

dungfungus said :

chewy14 said :

dungfungus said :

jasmine said :

dungfungus
You are making a few assumptions. I am not being politically tribal on this issue. I was also against the previous government raising the retirement age and against their watered down version of the mining tax. This came after pressure from the mining industry but the Labor Government should have stuck to their guns.

Your analogy of going out and finding a gold nugget is comparing apples and oranges; and is incorrect. I have to pay tax on the value of my nugget and did not ask any assistance from the government to help me find it. I paid for my own pick and shovel and my own petrol (without subsidy). I am also happy to pay tax on the value of my nugget as it pays for hospitals and other essential services.

Contrast with big mining companies who routinely use offshore tax havens and lobby governments for all manner of tax minimisation ‘incentives’ , fuel subsidies and grants. I also don’t have access to government intelligence services to bug foreign cabinet rooms to gain an advantage in my ventures as is the case with some oil and gas negotiations (Timor). I also won’t get a job on a mining company board when I retire as some politicians from both sides of the ideological spectrum.

Yes, the resources may be there for all to extract but a fair taxation regime ensures that all Australians benefit in some way from their country’s resources. Currently most of the mining companies are foreign owned which also means the low-taxed profits are moved offshore.

I specifically said how would you like to share a portion of your NET profit (meaning after you had already paid the mining costs and income tax). That is what the Mining Super Tax is all about – a residual tax levied after normal taxes and royalties are paid.
In claiming you would not get a “petrol subsidy”, I think you are confusing this with the Diesel Fuel Rebate which is waived where agricultural and mining vehicles are exclusively used off road.
A petrol powered hybrid doesn’t fall within this category.
I think you are a little bit paranoid about some of the the other stuff but your heart is in the right place.

Dungfungus,
The difference being that the minerals mined are owned by the states which is different to any other industry.
If you owned a product that you sold to a retailer for $50 which the retailer on sold for $100 do you think you might ask for a higher sale price if that retailer could suddenly sell your product for $200?

There are different methods and taxation systems to ensure that we get maximum value for assets that are owned by us and you can’t compare resource rents with arbitrarily raising taxes on an industry because they’re extremely profitable. You can argue that royalties are a better system if you want but there is a lot economic theory suggesting that they aren’t.

What “difference” are you talking about?
The mining industry does not sell to retailers who on-sell the same product so that argument you are trying to apply is invalid. As far as I am aware, coal and iron ore are sold direct to the end users who use the minerals to produce electricity and steel which then may be sold to retailers.
I wasn’t suggesting that royalties are a better system than “other economic theory” (whatever that may be) but it seems to work OK at present. I think it is levied on volume and not price.

The mining industry are the retailers selling a product owned by the states (us). And yes I know its not really as simple as that because there are massive risks taken by some of these companies in exploration and infrastructure but it is true that we own the product that they are digging up and selling.
I’m not going to argue here about the best forms of taxation for the mining industry (because its beyond my knowledge) but there is a vast amount of research out there comparing various systems of taxation and their distortions of the market and investment decisions made by companies (a google search will find you plenty). It’s not nearly as simple as miners paying royalties and income tax therefore they shouldn’t pay more or pay different amounts under a different system.

chewy14 said :

dungfungus said :

jasmine said :

dungfungus
You are making a few assumptions. I am not being politically tribal on this issue. I was also against the previous government raising the retirement age and against their watered down version of the mining tax. This came after pressure from the mining industry but the Labor Government should have stuck to their guns.

Your analogy of going out and finding a gold nugget is comparing apples and oranges; and is incorrect. I have to pay tax on the value of my nugget and did not ask any assistance from the government to help me find it. I paid for my own pick and shovel and my own petrol (without subsidy). I am also happy to pay tax on the value of my nugget as it pays for hospitals and other essential services.

Contrast with big mining companies who routinely use offshore tax havens and lobby governments for all manner of tax minimisation ‘incentives’ , fuel subsidies and grants. I also don’t have access to government intelligence services to bug foreign cabinet rooms to gain an advantage in my ventures as is the case with some oil and gas negotiations (Timor). I also won’t get a job on a mining company board when I retire as some politicians from both sides of the ideological spectrum.

Yes, the resources may be there for all to extract but a fair taxation regime ensures that all Australians benefit in some way from their country’s resources. Currently most of the mining companies are foreign owned which also means the low-taxed profits are moved offshore.

I specifically said how would you like to share a portion of your NET profit (meaning after you had already paid the mining costs and income tax). That is what the Mining Super Tax is all about – a residual tax levied after normal taxes and royalties are paid.
In claiming you would not get a “petrol subsidy”, I think you are confusing this with the Diesel Fuel Rebate which is waived where agricultural and mining vehicles are exclusively used off road.
A petrol powered hybrid doesn’t fall within this category.
I think you are a little bit paranoid about some of the the other stuff but your heart is in the right place.

Dungfungus,
The difference being that the minerals mined are owned by the states which is different to any other industry.
If you owned a product that you sold to a retailer for $50 which the retailer on sold for $100 do you think you might ask for a higher sale price if that retailer could suddenly sell your product for $200?

There are different methods and taxation systems to ensure that we get maximum value for assets that are owned by us and you can’t compare resource rents with arbitrarily raising taxes on an industry because they’re extremely profitable. You can argue that royalties are a better system if you want but there is a lot economic theory suggesting that they aren’t.

What “difference” are you talking about?
The mining industry does not sell to retailers who on-sell the same product so that argument you are trying to apply is invalid. As far as I am aware, coal and iron ore are sold direct to the end users who use the minerals to produce electricity and steel which then may be sold to retailers.
I wasn’t suggesting that royalties are a better system than “other economic theory” (whatever that may be) but it seems to work OK at present. I think it is levied on volume and not price.

dungfungus said :

jasmine said :

dungfungus
You are making a few assumptions. I am not being politically tribal on this issue. I was also against the previous government raising the retirement age and against their watered down version of the mining tax. This came after pressure from the mining industry but the Labor Government should have stuck to their guns.

Your analogy of going out and finding a gold nugget is comparing apples and oranges; and is incorrect. I have to pay tax on the value of my nugget and did not ask any assistance from the government to help me find it. I paid for my own pick and shovel and my own petrol (without subsidy). I am also happy to pay tax on the value of my nugget as it pays for hospitals and other essential services.

Contrast with big mining companies who routinely use offshore tax havens and lobby governments for all manner of tax minimisation ‘incentives’ , fuel subsidies and grants. I also don’t have access to government intelligence services to bug foreign cabinet rooms to gain an advantage in my ventures as is the case with some oil and gas negotiations (Timor). I also won’t get a job on a mining company board when I retire as some politicians from both sides of the ideological spectrum.

Yes, the resources may be there for all to extract but a fair taxation regime ensures that all Australians benefit in some way from their country’s resources. Currently most of the mining companies are foreign owned which also means the low-taxed profits are moved offshore.

I specifically said how would you like to share a portion of your NET profit (meaning after you had already paid the mining costs and income tax). That is what the Mining Super Tax is all about – a residual tax levied after normal taxes and royalties are paid.
In claiming you would not get a “petrol subsidy”, I think you are confusing this with the Diesel Fuel Rebate which is waived where agricultural and mining vehicles are exclusively used off road.
A petrol powered hybrid doesn’t fall within this category.
I think you are a little bit paranoid about some of the the other stuff but your heart is in the right place.

Dungfungus,
The difference being that the minerals mined are owned by the states which is different to any other industry.
If you owned a product that you sold to a retailer for $50 which the retailer on sold for $100 do you think you might ask for a higher sale price if that retailer could suddenly sell your product for $200?

There are different methods and taxation systems to ensure that we get maximum value for assets that are owned by us and you can’t compare resource rents with arbitrarily raising taxes on an industry because they’re extremely profitable. You can argue that royalties are a better system if you want but there is a lot economic theory suggesting that they aren’t.

milkman said :

NoImRight said :

VYBerlinaV8_is_back said :

NoImRight said :

dungfungus said :

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

A post I actually agree with mostly. 🙂
Not sure why negative gearing is “immoral”. An investment property is just a business investment. Business owners can claim the same deductions. Do you say its immoral for a plumber to claim the payments on his car lease? How is it any different?

Or is this the ethics of envy?

Changing negative gearing wouldn’t change house prices much, because any loss would be carried forward until the asset was positively geared anyway.

Im not sure we are talking about the same thing? I think you are referring to a property that has a bigger debt than its value. Is that correct? negative gearing is more about claiming expenses to offset some costs in ownership.

There’s been chatter about this issue on the property investment forums recently, and the thinking is that if the laws were changed to prevent negative gearing, the unclaimed losses would be carried forward into future years when the property was making a profit and deducted then (much like capital losses are now). As such, there’d be no meaningful change. This has nothing to do with the value of the property itself.

Is this what you were referring to VYBerlinaV8_Is_back?

Yes.

dungfungus said :

bigred said :

A lot of incorrect information being spruked here. I wish a few people would learn some facts before engaging keyboard.

I will focus on so called negative gearing. As a wealth building exercise it can be very beneficial if you have spare financial resources, a long term strategy and willingness to actively manage your assets. It also has benefits to government, through providing rental accomodation that it may have to provide otherwise, and carry on its balance sheet. Then there is the issue of property owners who also vote.

What also tends to happen is that as the property owners head towards retirement they liquidate some properties to extinguish ongoing liabilities. I have noticed the 50 something cardigan wearers selling up in preparation for the imminent Hockey Budget and job slashing. Some of these folk are seriously cashed up waiting for the VR tap on shoulder.

Without commenting on the validity or otherewise of your claim that “a lot of incorrect information being spruked (sic) here”, you have at least confirmed my claim that negative gearing (involving residential investment properties) is immoral by citing the “50 something cardigan wearers selling up in preparation for the imminent Hockey Budget and job slashing. Some of these folk are seriously cashed up waiting for the VR tap on shoulder”.
You are obviously referring to the high paid public servant property barons who have not only been paid wages by the ordinary taxpayer but they have had a lot of the tax deducted from their wages returned to them by the ordinary taxpayer thanks to their negatively geared investments.
You are suggesting that now they are cashing in some of their property investments (and will benefit from generous capital gains concessions) while they await equally generous ordinary taxpayer funded voluntary redundancy packages prior to receiving their ordinary taxpayer funded defined benefit pensions.
And people on this thread ignore this situation choosing instead to put the boot into self funded retirees and Gina Reinhart.

Actually, it is the EL1 Cohort who seem to have made serious $$
$

jasmine said :

dungfungus
You are making a few assumptions. I am not being politically tribal on this issue. I was also against the previous government raising the retirement age and against their watered down version of the mining tax. This came after pressure from the mining industry but the Labor Government should have stuck to their guns.

Your analogy of going out and finding a gold nugget is comparing apples and oranges; and is incorrect. I have to pay tax on the value of my nugget and did not ask any assistance from the government to help me find it. I paid for my own pick and shovel and my own petrol (without subsidy). I am also happy to pay tax on the value of my nugget as it pays for hospitals and other essential services.

Contrast with big mining companies who routinely use offshore tax havens and lobby governments for all manner of tax minimisation ‘incentives’ , fuel subsidies and grants. I also don’t have access to government intelligence services to bug foreign cabinet rooms to gain an advantage in my ventures as is the case with some oil and gas negotiations (Timor). I also won’t get a job on a mining company board when I retire as some politicians from both sides of the ideological spectrum.

Yes, the resources may be there for all to extract but a fair taxation regime ensures that all Australians benefit in some way from their country’s resources. Currently most of the mining companies are foreign owned which also means the low-taxed profits are moved offshore.

I specifically said how would you like to share a portion of your NET profit (meaning after you had already paid the mining costs and income tax). That is what the Mining Super Tax is all about – a residual tax levied after normal taxes and royalties are paid.
In claiming you would not get a “petrol subsidy”, I think you are confusing this with the Diesel Fuel Rebate which is waived where agricultural and mining vehicles are exclusively used off road.
A petrol powered hybrid doesn’t fall within this category.
I think you are a little bit paranoid about some of the the other stuff but your heart is in the right place.

dungfungus
You are making a few assumptions. I am not being politically tribal on this issue. I was also against the previous government raising the retirement age and against their watered down version of the mining tax. This came after pressure from the mining industry but the Labor Government should have stuck to their guns.

Your analogy of going out and finding a gold nugget is comparing apples and oranges; and is incorrect. I have to pay tax on the value of my nugget and did not ask any assistance from the government to help me find it. I paid for my own pick and shovel and my own petrol (without subsidy). I am also happy to pay tax on the value of my nugget as it pays for hospitals and other essential services.

Contrast with big mining companies who routinely use offshore tax havens and lobby governments for all manner of tax minimisation ‘incentives’ , fuel subsidies and grants. I also don’t have access to government intelligence services to bug foreign cabinet rooms to gain an advantage in my ventures as is the case with some oil and gas negotiations (Timor). I also won’t get a job on a mining company board when I retire as some politicians from both sides of the ideological spectrum.

Yes, the resources may be there for all to extract but a fair taxation regime ensures that all Australians benefit in some way from their country’s resources. Currently most of the mining companies are foreign owned which also means the low-taxed profits are moved offshore.

jasmine said :

It’s a terrible idea and one that has been introduced to replace the Age Pension with Newstart with full knowledge of the risk employers won’t generally hire older people. Unless the government creates incentives for employers or creates age-specific jobs I can forsee a rise in approaches to charity groups. Both the ALP and Coalition sprout job creation. I can’t see how raising the pension age will assist with that aim. People who are able and who want to work longer already can.

In the near future there will be many women who left the workforce for a time to raise children reaching retirement age. There are also people who started working when superannuation was not compulsory and it was only executives and public servants who enjoyed the benefits. I remember in the 80s people got paid out their Super when they left the APS.

Designing a Budget should not only be about savings but about doing what’s fair especially when one contrasts the level of middle class welfare and corporate welfare that is often handed out. While the Coalition is cutting corporate welfare (when it suits) it is increasing middle class welfare. What are governments for? Shouldn’t governments also work for the greater benefits to the community ensuring safety nets which ultimately benefit the whole community. One only has to visit the USA to see the effects of wage disparity and an unregulated labour market. It seems an odd choice of this government to think about raising pension eligibility while working hard against new taxes such as the Super Profits Mining Tax which would also distribute the benefits of Australian resources more fully to its citizens.

I was thinking “this post makes a lot of sense”.
Well, up to a point it does. For example, it is meaningless to use comparisons of what happens in other countries without examining other factors.
You refer to the word “choice” when you disagree with the government’s policy to raise pension age and at the same time abandon the Super Profits Mining Tax. You forget that the previous government raised the pension age as a matter of policy and they also introduced the Mining Tax which is costing more to administer that it collects. Are you happy to have part of your taxes continue to subsidising a loss making policy? I’m not.
Regarding “Australian resources”, they are there for all to extract. You can go out with a pick and shovel and look for wealth the same as the big mining companies do but I’ll bet you wouldn’t thnk it was fair if you found a huge gold nugget only to be told by the government that you had to share a portion of the net profits with all other Australians who gave you no support in your mining venture.

wildturkeycanoe said :

Cripey! You people are talking about superannuation in terms of massive investment opportunities. At the age of forty-odd, I have less than $100k in super, having paid the regulated amounts and lost plenty in the crashes we’ve seen. At retirement, depending on the global economics and my relevant employer’s super scheme, it may be enough to survive maybe five years of retirement. Where do people come up with these millions of dollars of superannuation when a person’s lifetime of total money earned could be less than that let alone their “nest egg”? Stock crashes can cost you your superannuation pension, so where is the government guarantee that all these “investments” will keep them alive till they pass naturally? I have herad first hand how super would have been better off in a bank savings account at 5% interest than in the hands of foreign ownership as is forced upon us, so tell me why shouldn’t there be a safety net for us when we physically can’t use power tools or shovels? I am myself in the situation where I’ll be paying the last pennies off my mortgage at 60, yet I can’t work in a physical trade anymore. Who can afford a mortgage on an unskilled job that doesn’t involve manual labour? If anyone can tell me, please do so now because there won’t be any jobs for 60 to 70 year olds let alone those in their forties right now, unless the government plans ahead for them. You will have school leavers battling for the same job vacancies as their grandparents and guess who will win? This country has gone down the gurgler….

I wish I was forty-odd again with $100K in my super knowing what I know now.
When I was that age I had about $40K in super. I was retrenched so I rolled over my $40K with a large bank who were boasting 40% returns for the previous 12 months. Like a fool I put it all in into their “growth” fund. It very rapidly delivered a “negative return” (superannuation industry code for “loss”).
I then transferred the remaining $25K to their “cash” option only to find out a year later that I copped another “negative return” and when I said how come you have lost money in a cash situation they replied that “cash” in the investment industry meant hedging, futures and other weird things – anything but cash management funds and term deposits (no front end commissions in that stuff).
I then decided to change some priorities in my life with money for retirement (not necessarily superannuation) becoming number one priority as I did not want to be cold and hungry in retirement.
At the same time I gathered as much knowledge as possible about the subject and as soon as could I started a SMSF because retail and other funds do not offer enough choice in investment plans and there is the everpresent risk of “stock market crashes” as you alluded to. It’s all about “trust” and control.
As soon as my home mortgage was paid off I invested all I could into superannuation being careful to stick to term deposits and high interest online savings accounts with preservation of capital until pension time being foremost.
There is a common misconception among retirees that there must be sufficient capital in their fund to generate at least $50k a year in retirement and the capital cannot be touched. In a SMSF in pension mode this would be tax free. At current term deposit/savings rates of about 4.5% one would have to have $1m in their fund to generate this amount and very few people are in this league.
The possibility of interest rates going to 10% is remote and it is likely they will go lower.
There are two choices; namely start drawing down capital (also tax free) to supplement yield (no one lives for ever and you can’t take it with you) and afterall, superannuation is about sustaining a dignified lifestyle in retirement.
The other choice is to wind up your SMSF and invest personally as the tax-free threshold for seniors is about $32K and their is no advantage in having a “tax free” super fund if eanings are below this level. Also, it costs about $3K a year to run a SMSF so this is a significant saving as well.
To supplement income, draw down capital. There is no need to bother Centrelink for an “entitlement”.

It’s a terrible idea and one that has been introduced to replace the Age Pension with Newstart with full knowledge of the risk employers won’t generally hire older people. Unless the government creates incentives for employers or creates age-specific jobs I can forsee a rise in approaches to charity groups. Both the ALP and Coalition sprout job creation. I can’t see how raising the pension age will assist with that aim. People who are able and who want to work longer already can.

In the near future there will be many women who left the workforce for a time to raise children reaching retirement age. There are also people who started working when superannuation was not compulsory and it was only executives and public servants who enjoyed the benefits. I remember in the 80s people got paid out their Super when they left the APS.

Designing a Budget should not only be about savings but about doing what’s fair especially when one contrasts the level of middle class welfare and corporate welfare that is often handed out. While the Coalition is cutting corporate welfare (when it suits) it is increasing middle class welfare. What are governments for? Shouldn’t governments also work for the greater benefits to the community ensuring safety nets which ultimately benefit the whole community. One only has to visit the USA to see the effects of wage disparity and an unregulated labour market. It seems an odd choice of this government to think about raising pension eligibility while working hard against new taxes such as the Super Profits Mining Tax which would also distribute the benefits of Australian resources more fully to its citizens.

Cripey! You people are talking about superannuation in terms of massive investment opportunities. At the age of forty-odd, I have less than $100k in super, having paid the regulated amounts and lost plenty in the crashes we’ve seen. At retirement, depending on the global economics and my relevant employer’s super scheme, it may be enough to survive maybe five years of retirement. Where do people come up with these millions of dollars of superannuation when a person’s lifetime of total money earned could be less than that let alone their “nest egg”? Stock crashes can cost you your superannuation pension, so where is the government guarantee that all these “investments” will keep them alive till they pass naturally? I have herad first hand how super would have been better off in a bank savings account at 5% interest than in the hands of foreign ownership as is forced upon us, so tell me why shouldn’t there be a safety net for us when we physically can’t use power tools or shovels? I am myself in the situation where I’ll be paying the last pennies off my mortgage at 60, yet I can’t work in a physical trade anymore. Who can afford a mortgage on an unskilled job that doesn’t involve manual labour? If anyone can tell me, please do so now because there won’t be any jobs for 60 to 70 year olds let alone those in their forties right now, unless the government plans ahead for them. You will have school leavers battling for the same job vacancies as their grandparents and guess who will win? This country has gone down the gurgler….

bigred said :

A lot of incorrect information being spruked here. I wish a few people would learn some facts before engaging keyboard.

I will focus on so called negative gearing. As a wealth building exercise it can be very beneficial if you have spare financial resources, a long term strategy and willingness to actively manage your assets. It also has benefits to government, through providing rental accomodation that it may have to provide otherwise, and carry on its balance sheet. Then there is the issue of property owners who also vote.

What also tends to happen is that as the property owners head towards retirement they liquidate some properties to extinguish ongoing liabilities. I have noticed the 50 something cardigan wearers selling up in preparation for the imminent Hockey Budget and job slashing. Some of these folk are seriously cashed up waiting for the VR tap on shoulder.

Without commenting on the validity or otherewise of your claim that “a lot of incorrect information being spruked (sic) here”, you have at least confirmed my claim that negative gearing (involving residential investment properties) is immoral by citing the “50 something cardigan wearers selling up in preparation for the imminent Hockey Budget and job slashing. Some of these folk are seriously cashed up waiting for the VR tap on shoulder”.
You are obviously referring to the high paid public servant property barons who have not only been paid wages by the ordinary taxpayer but they have had a lot of the tax deducted from their wages returned to them by the ordinary taxpayer thanks to their negatively geared investments.
You are suggesting that now they are cashing in some of their property investments (and will benefit from generous capital gains concessions) while they await equally generous ordinary taxpayer funded voluntary redundancy packages prior to receiving their ordinary taxpayer funded defined benefit pensions.
And people on this thread ignore this situation choosing instead to put the boot into self funded retirees and Gina Reinhart.

Increasing the qualifying period for the Capital Gains Tax concession (i.e. only half the gain is taxable) from twelve months to, say, five years would produce Budget savings, deal with some of the problems attributed to negative gearing of property and avoid claims of discrimination (and attempted shenanigans to get around it) if negative gearing rules are changed for one asset class.

It would also be fairer to people who do real work for a living, compared to people who make some or all of their income through asset price speculation.

A lot of incorrect information being spruked here. I wish a few people would learn some facts before engaging keyboard.

I will focus on so called negative gearing. As a wealth building exercise it can be very beneficial if you have spare financial resources, a long term strategy and willingness to actively manage your assets. It also has benefits to government, through providing rental accomodation that it may have to provide otherwise, and carry on its balance sheet. Then there is the issue of property owners who also vote.

What also tends to happen is that as the property owners head towards retirement they liquidate some properties to extinguish ongoing liabilities. I have noticed the 50 something cardigan wearers selling up in preparation for the imminent Hockey Budget and job slashing. Some of these folk are seriously cashed up waiting for the VR tap on shoulder.

milkman said :

NoImRight said :

VYBerlinaV8_is_back said :

NoImRight said :

dungfungus said :

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

A post I actually agree with mostly. 🙂
Not sure why negative gearing is “immoral”. An investment property is just a business investment. Business owners can claim the same deductions. Do you say its immoral for a plumber to claim the payments on his car lease? How is it any different?

Or is this the ethics of envy?

Changing negative gearing wouldn’t change house prices much, because any loss would be carried forward until the asset was positively geared anyway.

Im not sure we are talking about the same thing? I think you are referring to a property that has a bigger debt than its value. Is that correct? negative gearing is more about claiming expenses to offset some costs in ownership.

There’s been chatter about this issue on the property investment forums recently, and the thinking is that if the laws were changed to prevent negative gearing, the unclaimed losses would be carried forward into future years when the property was making a profit and deducted then (much like capital losses are now). As such, there’d be no meaningful change. This has nothing to do with the value of the property itself.

Is this what you were referring to VYBerlinaV8_Is_back?

As I understood, there is a time limit on losses than can be carried forward and “negative” relates to the borrowing/holding costs over the rental income, not the loan to property value ratio.
The current “advantage” with negative gearing is that “losses” can be claimed against taxes levied on wages in the same financial year. Unless “investors” can get that tax money back they will be unable to service the investment loan and fund normal living expenses at the same time.

Canfan said :

Hi Masquara – Thanks for your thoughts. We are very aware of RiotACT’s local focus and you will notice that a large percentage of our content is purely focused on Canberra and the region. That said, if we come across a thoughtful piece that touches on the community (i.e. how the community would need to change in order to open employment to older workers) we’re unlikely to apologise for sharing it.

You may well find that under the new APS regime, commonwealth public servants who were quite comfortable posting on a local-issues site will decamp.

NoImRight said :

VYBerlinaV8_is_back said :

NoImRight said :

dungfungus said :

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

A post I actually agree with mostly. 🙂
Not sure why negative gearing is “immoral”. An investment property is just a business investment. Business owners can claim the same deductions. Do you say its immoral for a plumber to claim the payments on his car lease? How is it any different?

Or is this the ethics of envy?

Changing negative gearing wouldn’t change house prices much, because any loss would be carried forward until the asset was positively geared anyway.

Im not sure we are talking about the same thing? I think you are referring to a property that has a bigger debt than its value. Is that correct? negative gearing is more about claiming expenses to offset some costs in ownership.

There’s been chatter about this issue on the property investment forums recently, and the thinking is that if the laws were changed to prevent negative gearing, the unclaimed losses would be carried forward into future years when the property was making a profit and deducted then (much like capital losses are now). As such, there’d be no meaningful change. This has nothing to do with the value of the property itself.

Is this what you were referring to VYBerlinaV8_Is_back?

NoImRight said :

dungfungus said :

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

A post I actually agree with mostly. 🙂
Not sure why negative gearing is “immoral”. An investment property is just a business investment. Business owners can claim the same deductions. Do you say its immoral for a plumber to claim the payments on his car lease? How is it any different?

Or is this the ethics of envy?

I am not sure if we are talking about the same thing.
The typical negative gearing I am referring to is when someone employed on PAYG wages uses the net financing and holding costs of an investment property as deductions against their personal taxation. At some stage, the rental income from the property may exceed the finance and holding costs so the difference is then taxable and the negative gearing ceases.
In the meantime, the wage earner generally minimises PAYG tax liability and there is an expectation of a windfall capital gain (concessional taxation arrangements apply) when the property is sold some time in the future.
It is one of the best known methods (schemes?) for high income earners to minimise personal income tax.
The other one is making “excessive” personal contributions to SMSFs. The latter one is generally despised by a lot of contributors to this thread so what makes negative gearing “purer” that the other is beyond my comprehension.
Both methods mean that other taxpayers who are not able to participate in these schemes end up subsidising those who can and that is immoral. It has nothing to do with envy.
When a plumber pays his vehicle lease the rental payments are charged against his plumbing income alone. I can’t believe that you could think that may be immoral (even if plumbers do charge like wounded bulls!)
With negative gearing on investment properties the net costs are charged against income derived from a totally different source.
That’s the difference.
There won’t be much further open discussion on negative gearing as it is so prevalent in Canberra. We all know someone who has a couple or more properties which are negatively geared and the subject is taboo.

Canfan said :

Hi Masquara – Thanks for your thoughts. We are very aware of RiotACT’s local focus and you will notice that a large percentage of our content is purely focused on Canberra and the region. That said, if we come across a thoughtful piece that touches on the community (i.e. how the community would need to change in order to open employment to older workers) we’re unlikely to apologise for sharing it.

I agree – I thought the original post was topical, refreshingly honest and had clear local relevance, with many Canberrans likely to have their career plans (and thus retirement plans) altered somewhat by the current and likely future federal spending cuts.

Unless we get to the point (I will believe it when I see it!) that the RiotAct has such an abundance of meaty, interesting posts which have a purely local focus, I think you should continue to be open to such pieces – in the absence of that, an overly strict local focus will be a recipe for dreary, repetitious inward-looking mediocrity.

Back on the original subject, my hope is that any changes to the age pension will be about better targeting. Access to the age pension is now unsustainably generous, but I don’t think that should be used as an excuse to cut back benefits to those who genuinely need it – just wind-back the access.

On the closely-related subject of superannuation, I thought one of the reviews held by the Howard government concluded (even then) that the costs of superannuation concessions were such that it would be cheaper to provide the age pension to all. Given the original intent of compulsory superannuation, I find it hard to see why the tax concessions should support retirement benefits well in excess of the level of the age pension. Compulsory superannuation should bring as many people as possible up to the level of the age pension, with the pension as a safety net for those who have some how missed out on adequate superannuation, but anything beyond that should be a matter for individuals, with no more tax benefits or concessions than savings outside the superannuation system.

VYBerlinaV8_is_back said :

NoImRight said :

dungfungus said :

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

A post I actually agree with mostly. 🙂
Not sure why negative gearing is “immoral”. An investment property is just a business investment. Business owners can claim the same deductions. Do you say its immoral for a plumber to claim the payments on his car lease? How is it any different?

Or is this the ethics of envy?

Changing negative gearing wouldn’t change house prices much, because any loss would be carried forward until the asset was positively geared anyway.

Im not sure we are talking about the same thing? I think you are referring to a property that has a bigger debt than its value. Is that correct? negative gearing is more about claiming expenses to offset some costs in ownership.

NoImRight said :

dungfungus said :

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

A post I actually agree with mostly. 🙂
Not sure why negative gearing is “immoral”. An investment property is just a business investment. Business owners can claim the same deductions. Do you say its immoral for a plumber to claim the payments on his car lease? How is it any different?

Or is this the ethics of envy?

Changing negative gearing wouldn’t change house prices much, because any loss would be carried forward until the asset was positively geared anyway.

In Singapore, where government supported retirement is non-existent

So what’s the CPF then?

dungfungus said :

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

A post I actually agree with mostly. 🙂
Not sure why negative gearing is “immoral”. An investment property is just a business investment. Business owners can claim the same deductions. Do you say its immoral for a plumber to claim the payments on his car lease? How is it any different?

Or is this the ethics of envy?

Masquara said :

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!

People in Canberra dont pay Super or get old?

chewy14 said :

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

I concede a lot of my deliberations are dodgy and I would like to think that people are not abusing the pension system. You are correct in describing it as a safety net but it is not only the “wealthy retired” people that have the opportunity to abuse the system – it happens at all socio-economic levels.
Just remember to that that stereotyped pensioner you constantly refer to has a big house because he raised a big family in it. Is it fair to socially engineer his departure from a place that holds so many memories? It’s a personal heritage to a lot of people and just because you see it as incongruent does not mean your solution is going to suit everyone.
What we have been debating is clearly of no interest to other Rioters (not local enough) so how about we debate the merits (or otherwise) of negative gearing as this is a very Canberra issue.
I believe it is immoral and I challenge those of you who do it to convice me otherwise.

Dungfungus,
Your maths was clearly dodgy. You said accumulated $1M in Super not contributed $1M.
And don’t try and bring the capital gains tax for selling within 12 months into this, its obvious you just plucked those two figures out of your posterior to try and back up your point.

Now, with regards to the tax rate of young vs old you still haven’t given a reason why they should be treated differently. Assets are assets and earnings are earnings no matter when they occur. Just because someone is in pension mode is not a reason.

And please outline you logic in regards to how younger people are not paying for well off people giving their children an inheritance with regards to the pension?

Pensioner owns house (large asset). Pensioner receives welfare from the taxes of younger people. Pensioner dies, gives house as inheritance.

I’ll say it again, the pension is welfare. Welfare is a safety net for those who cannot provide for themselves. Why do you support socialist policies redistributing wealth to already well off people who have the means to look after themselves?

Pork Hunt said :

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?

Not so. I’m totally engaged with federal politics – but they mess with this place. Riotact was a success because of JB’s policy. Ignore it at Riotact’s peril.

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?

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!

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.

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.

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.

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.

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.

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.

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.

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.

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.

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?

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?

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.

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.

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!

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.

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?

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.

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.

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!

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.

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.

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

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.

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.

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.

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.

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.

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.