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Govt tells retirees: run down your super
The government has told retirees affected by tougher pension rules to spend their super, and not assume they can maintain it as “a capital pool to be passed on as an inheritance”.
Minister for Social Services Scott Morrison told Fairfax Media that retirees should draw down on their super savings to maintain an income, and should not expect to pass on sizable lump sums to their children.
"The purpose of providing tax incentives to encourage people to build up their super is so they can draw down on it in their retirement,” Mr Morrison said.
Although superannuation was left relatively untouched in the 2015 federal Budget, it looks set to be big ticket item at the next federal election.
The Labor party has already released its plans for superannuation if elected, which include taxing earnings in retirement at 15 per cent for those earning over $75,000 and reducing the threshold of the high-income super charge to $250,000 from $300,000.
"I read that Tony Abbott wants to make superannuation an election issue. Bring it on. Labor is always delighted to fight an election on superannuation, one of our proudest creations," said shadow treasurer Chris Bowen at the National Press Club last week.
Morrison ,check your own and colleagues pockets for how much money of tax payers you take and for what?0- Not altogether, Ralph. The sole purpose of superannuation is to provide retirement and or death benefits to a dependant. Also Snags, superannuation law applies equally to all. It is just a set of rules, that's all, and it doesn't favour the rich and is not unfair to the poor. Unless you think that you are entitled to other people's money, but that's not a superannuation issue.0
- Thank you to the Government for the free advice. Now tell each retiree how long they will live so that the Government sanctioned draw-down will last the distance.
I am surprised that the Government is not more concerned that spending retirees fall back to reliance on Government support. Encourage and reward the frugal, especially given they have worked and saved to be partially or fully self-supporting.
Do not try to solve the right problem with the wrong solution.0 - Hey guys, I have been watching the comments and one thing stands out, everyone who has invested heavily did so legally under the rules. So stop grumbling about it, those that had the opportunity to use the rules as they stood, did so in compliance with the SIS Act and Regulations. If your not happy go talk to your elected politician. I agree with your sentiments but just don't blame people who legally use the legislation at the time. If you had the money you would have too.0
- Actually Scott there is no compulsion or requirement to start a pension. You can die aged 100 leaving all your super untouched if you wish - why you would want to is another question altogether.
Under the sole purpose test, super is all about providing for retirement. Anything else is illegal under the SIS Act. Part of providing for retirement is amassing sufficient wealth while working to do so. IMO it should not be about amassing wealth within super primarily to derive a tax advantage or to pass on large tax free amounts to the dependents.0 - already is Eric0
- Snags, I hear your reference to "fair to all" ... just like we heard time & time again from Penny Wong droning on and so many other Pollies on both sides. I do agree and consider it is about time the Pollies look at their own benefits (super and other benefits received after employment which we are paying for) and to stop considering themselves as being more equal than "All Australians" to whom they serve. I will be voting for the Pollie who addresses the inequity in their own benefits.0
- Should there be an age, maybe equal to pension age, where super must be converted to pension mode and therefore minimum pensions must be withdrawn?0
- Always interestin when this subject is vetted. Supaerannutaion is a wonderful thing. But in the past the rules have been relaxed so much in favour of the people with the money who can use the rules to their advantage. My question is wasn't super originally about helping people who had little to begin with, to assist them in their later life, not about allowing the wealthier people grow their wealth with lower taxation benefits? While we have the rules we do in place, it is the people with the money that will use the system to grow their wealth, and the people with little will continue to struggle. I think we need tpo stop this inequity that exists, it needs to fair to all, not provide an unfair benefit to those who have the wealth already.0
- SO the politicians are at it again, well you don't need to be a student of behavioural investing to see what will happen next. Super will diminish as the preferred retirement funding vehicle and parents well before retirement will divert capital into other areas owned and controlled by the kids and grand children. Or simply set aside enough capital to fund zillion dollar life policies owned by the kids on parents lives, so no matter how the polies try to manipulate things to bring in Death Duties, it just won't work0
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