Labors Super changes

[cartwright]

Some numbers:

At age 25, he says you would have to be earning $200,000 a year, to have $3 million in super by age 67 (under the assumption your super contributions are 12 per cent per year, earnings were 5 per cent per year for the next 42 years and you pay 1 per cent in fees).

And

Long story short, to hit the $3m cap, you either have to start by earning four-times the typical salary and keep earning at that rate for the next 42 years, or you'd need to earn double the long-term average investment performance each and every year for 42 years," he explained.


So yeah, think the average person doesn’t need to worry about this.

Superannuation tax changes will not be indexed, says treasurer. Here's what that means - ABC News

amp.abc.net.au

 

[Father Jack]

I'm not sure how the super thing got twice the coverage of the robodebt debacle on Insiders this morning.

 

[ralphmalph]

I'm not sure how the super thing got twice the coverage of the robodebt debacle on Insiders this morning.

Because it’s a crap show?

 

[Kanga Commando]

Sorry, I am having difficulty putting an example into your question.

We have a woman in a constitutionally protected defined benefit plan who has elected to convert the pension to a lump sum and still in the accumulation phase?

So, if it does remain in accumulation for the entirety of the life expectancy, she will pay more tax due to earning income for longer. But that is not restricted to the initial type of fund.

Move into Pension phase, and then that income is tax free and men and women are treated equally.

Or are you asking about women with balances above thresholds? Which I don't think is a cohort of women who have been disadvantaged by years out of contributions raising families.

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Not exactly...

The value of the total taxable amount within a defined benefit scheme, for the purposes of the new tax plan, is calculated ( my understanding ) on the expectation of total payments made to the person over the term of their natural life.

No one can accurately estimate this of course, so, again from my understanding, they use the average lifespan - different for male and female.

Mathematically, ( men and women )

assessable amount = lifespan ( years ) x yearly payments

therefore, a woman can potentially go over the $3M, and yet, her annual pension could be less than a male. She is expected to live longer.

To be more blunt, consider a male and female public servant, same wage, same defined benefit plan. They both retire at the same time. In theory, through my understanding, the woman could be subject to a greater tax burden, purely because she is expected to live longer.

This is how one public servant I know, still employed, explained it.

I actually know quite a few female public servants. One about to retire at 65. I know she will get tax advice of course, so this is for my own curiosity. I am certain she will be subject to this effect though but as its personal I dont want to pry with her.

FWIW - I have my own defined benefit, but it's very different to that of a public servant. My own value will be known beforehand so I can manage my retirement and rollover amount as i see fit. but a female public servant can not because her benefit is based on a payout expectancy. The public service defined benefit scheme works differently than any other super, and if I am honest, it is obscenely generous. The people I know are all pre-jeff kennet who changed these benefits, so their schemes are full up with benefits. Later public servants dont get these extras...

 

[FRUMPY]

$3M in a super account
Say it earns 5% a year

Work out what 15% tax ON THE EARNINGS is, then work out 30% on THE EARNINGS IS
Subtract the smaller from the larger and that is the difference that the RWNJ are actually going ape-s**t about

It is negligible

And it is still a concessional tax

I don't know how many are actually complaining, news will make more of it than anyone individually.

I have 3 clients who fall into this category, and none of them are worried about it.

If anyone does complain, then goes to show they are like everyone else. Anyone who gets taxed more will complain, wouldn't you? It's why they only announce tax breaks around elections.

Overall, I agree, it's not that much more for these people to pay and they can afford it.

But overall, it's billions of dollars extra to the government each year, so it's not chicken feed, especially as it's such a minority of people.

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[Crankyhawk]

“Australia’s superannuation system provides broader benefits to the economy and financial system. Superannuation is an increasingly important source of capital in our economy and the significant scale of Australia’s superannuation system contributes to the strength of our financial markets through capital deepening. There is a significant opportunity for Australia to leverage greater superannuation investment in areas where there is alignment between the best financial interests of members and national economic priorities, particularly given the long-term investment horizon of superannuation funds. For these broad benefits of superannuation to be maximised and for superannuation to best support higher living standards for Australians over time, it is critical for there to be a clear, shared understanding of the objective of superannuation.”

And on the basis of that, you reckon that the government is gonna take your super? Seriously?

I also interpreted that as using/ directing super funds to invest in particular nation building projects

 

[Crankyhawk]

I reckon 90%+ of all people with over $3m in super are with an SMSF.

I don’t trust those using SMSF to be following rules about no direct benefits. So * ‘‘em sideways!

 

[Crankyhawk]

I’ll never be in the position, but in these large funds I dare say the investments are multiple, and will earn at different rates.

Which investments are below the $3m and which are over? Perhaps you can enlighten the ignorant like me?

Can an account holder claim his or her dud investments returning nothing or very little are the ones ‘above $3million?’


You are also attributing -projecting- the subject of indexation which I didn’t mention AT ALL in the post you responded to. Please desist

No. It’s all earnings on any account above $3million

 

[Rob]

No. It’s all earnings on any account above $3million

It actually is proposed to work on a proportion basis, and on the increase in account value.

eg. SMSF with 1 member with a balance of $5m at 30 June 2025. Balance at 30 June is $6m at 30 June 2026. But as only 50% of the balance is over $3m, the tax will be calculated on 50% of $1m, i.e 15% x $500k, so 150k tax. Contributions or withdrawals (i've assumed zero in my example above) will decrease or increase resepectively the amount subject to tax.

This is different to how super funds pay income tax now, where it is on actual earnings, not increase or decrease in value.

Edit: my maths is ****ed, I meant 75k tax, not 150k.

 

[Hornberger]

It actually is proposed to work on a proportion basis, and on the increase in account value.

eg. SMSF with 1 member with a balance of $5m at 30 June 2025. Balance at 30 June is $6m at 30 June 2026. But as only 50% of the balance is over $3m, the tax will be calculated on 50% of $1m, i.e 15% x $500k, so 150k tax. Contributions or withdrawals (i've assumed zero in my example above) will decrease or increase resepectively the amount subject to tax.

This is different to how super funds pay income tax now, where it is on actual earnings, not increase or decrease in value.

Do you have a source for that?

 

[Rob]

Do you have a source for that?

I actually read the government's fact sheet.

 

[Kyptastic]

Even Liberal supporters are in favour of the super changes

 

[ralphmalph]

I also interpreted that as using/ directing super funds to invest in particular nation building projects

See post #212

There’s a truckload of $ in super, looking for things to invest in. It’s no surprise that it’s perceived as an opportunity for funding public works.

However, identifying it as an opportunity is a long way from compelling a super fund to invest a % of funds in “nation building” projects.

 

[Festerz]

Even Liberal supporters are in favour of the super changes

Yeah but getting 29% of voters to disapprove of a change to the concessional tax rate that disadvantages just 0.5% of the population at the top end of town is not a bad effort.

Zero chance of any PM EVER having the political cajones to make the much needed comprehensive changes to the tax system to fix the huge problems with efficiency, effectiveness and equity that EVERY tax review has highlighted in the past 40 years.

But persecute the most vulnerable in our society with illegal schemes like RoboDebt? Go your hardest mate!

Job done Murdoch et al.

 

[Crankyhawk]

It actually is proposed to work on a proportion basis, and on the increase in account value.

eg. SMSF with 1 member with a balance of $5m at 30 June 2025. Balance at 30 June is $6m at 30 June 2026. But as only 50% of the balance is over $3m, the tax will be calculated on 50% of $1m, i.e 15% x $500k, so 150k tax. Contributions or withdrawals (i've assumed zero in my example above) will decrease or increase resepectively the amount subject to tax.

This is different to how super funds pay income tax now, where it is on actual earnings, not increase or decrease in value.

Edit: my maths is ****ed, I meant 75k tax, not 150k.

i thought there was also a 15% tax for balances over 1.5 million (on earnings) - or is that 15% for all balances (i am not sure)

 

[Home Alone]

Not exactly...

The value of the total taxable amount within a defined benefit scheme, for the purposes of the new tax plan, is calculated ( my understanding ) on the expectation of total payments made to the person over the term of their natural life.

No one can accurately estimate this of course, so, again from my understanding, they use the average lifespan - different for male and female.

Mathematically, ( men and women )

assessable amount = lifespan ( years ) x yearly payments

therefore, a woman can potentially go over the $3M, and yet, her annual pension could be less than a male. She is expected to live longer.

To be more blunt, consider a male and female public servant, same wage, same defined benefit plan. They both retire at the same time. In theory, through my understanding, the woman could be subject to a greater tax burden, purely because she is expected to live longer.

This is how one public servant I know, still employed, explained it.

I actually know quite a few female public servants. One about to retire at 65. I know she will get tax advice of course, so this is for my own curiosity. I am certain she will be subject to this effect though but as its personal I dont want to pry with her.

FWIW - I have my own defined benefit, but it's very different to that of a public servant. My own value will be known beforehand so I can manage my retirement and rollover amount as i see fit. but a female public servant can not because her benefit is based on a payout expectancy. The public service defined benefit scheme works differently than any other super, and if I am honest, it is obscenely generous. The people I know are all pre-jeff kennet who changed these benefits, so their schemes are full up with benefits. Later public servants dont get these extras...

Not exactly...

The value of the total taxable amount within a defined benefit scheme, for the purposes of the new tax plan, is calculated ( my understanding ) on the expectation of total payments made to the person over the term of their natural life.

No one can accurately estimate this of course, so, again from my understanding, they use the average lifespan - different for male and female.

Mathematically, ( men and women )

assessable amount = lifespan ( years ) x yearly payments

therefore, a woman can potentially go over the $3M, and yet, her annual pension could be less than a male. She is expected to live longer.

To be more blunt, consider a male and female public servant, same wage, same defined benefit plan. They both retire at the same time. In theory, through my understanding, the woman could be subject to a greater tax burden, purely because she is expected to live longer.

This is how one public servant I know, still employed, explained it.

I actually know quite a few female public servants. One about to retire at 65. I know she will get tax advice of course, so this is for my own curiosity. I am certain she will be subject to this effect though but as its personal I dont want to pry with her.

FWIW - I have my own defined benefit, but it's very different to that of a public servant. My own value will be known beforehand so I can manage my retirement and rollover amount as i see fit. but a female public servant can not because her benefit is based on a payout expectancy. The public service defined benefit scheme works differently than any other super, and if I am honest, it is obscenely generous. The people I know are all pre-jeff kennet who changed these benefits, so their schemes are full up with benefits. Later public servants dont get these extras...

I understand yet I don't understand.

I started Actuarial training in the 1980s (but never completed). so have a concept of your quer. That gives away my age!

I am sure that there could be more detail that could be exposed, but NO actuary would value a lifetime pension equivalent like that. Yes, that would be the total outgoings from the fund but doesn't represents the true/actuarial/taxarion value ( see commuation factors). So my question is does the fund pay out on this value of life expectancy times salary?

I suspect that the value of life expectancy x salary is a marketing strategy for fund retention rather than a taxation valuation.

 

[Rob]

i thought there was also a 15% tax for balances over 1.5 million (on earnings) - or is that 15% for all balances (i am not sure)

Well it's a bit more complex than that, but you're talking about when a fund goes into pension phase and it's earnings become tax free. I think it's around $1.7m now that you can transfer and get that concessional treatment. The rest of it is treated as it was in accumulation phase, i.e 15% tax on earnings.

This new tax, as I understand it, is calculated completely differently and it makes no difference whether you're in accumulation or pension phase.

 

[Schneebly11]

Even Liberal supporters are in favour of the super changes

As soon as the Today show had posted this mocking segment ridiculing those with over $3 million in their super then they Coalition should’ve realised that middle Australia wasn’t falling for their gambit:



Also interesting to see that more university educated people support the changes rather than those with no tertiary education even though uni educated would be in higher salary and be more likely to have more in super and be more affected by these changes.

Just shows the Coalition is going after the low information voter with scare tactics to fool them into thinking they will be disadvantaged by something that will have no effect on them.

 

[Festerz]

As soon as the Today show had posted this mocking segment ridiculing those with over $3 million in their super then they Coalition should’ve realised that middle Australia wasn’t falling for their gambit

That is so lame I reckon Costello will give it a thumbs up for pretending to be sympathetic to the issue while missing the point entirely.

 

[Schneebly11]

That is so lame I reckon Costello will give it a thumbs up for pretending to be sympathetic to the issue while missing the point entirely.

But it does mock the idea that anyone except the Uber rich should be concerned, doesn’t it?

To me that segment was a boon for the ALP, it broke apart the Liberals rhetoric that “average Aussies” would now face higher taxes, by absurdly pointing out its only going to be a rise in the Uber rich.

 

[E Shed]

it’s why I gave the program away some time ago. replete with liberal apologists like speers, campbell, coorey......



and

I keep looking at the MS media everyday wondering where are the stories about the Robodebt?
10 years ago with ABC would have been all over this stuff and the respectable papers like the SMH as it was would have felt obliged to cover it at least.
I can't believe how completely captured the media has become.

Morrisson and is mates should be in Jail, seriously. and they aren't even being called to account for it. Even if they can lie there way through the RC the course of public opinion should have had them all resigned in disgrace by now and pariahs but its like it never happened.

 

[Baltimore Jack]

So not that good for the treasury bottom line then? After all there's only a handful of these people

Sorry I’m not that combative here, but if someone pulls me up and then post s**t, then…..

or bright

Was the example to difficult for you to understand?

 

[Crankyhawk]

or bright

Was the example to difficult for you to understand?

I think (from the posts I've seen) is the concern that in the future (talking 50 - 100 years) that with inflation and (presumably) wage increases that a $3 million balance will be more common than it currently is, hence looking for indexation at some point (though I personally don't think it is going to happen until the $3 million balances are say 20% of super holders)

 

[Gough]

I think (from the posts I've seen) is the concern that in the future (talking 50 - 100 years) that with inflation and (presumably) wage increases that a $3 million balance will be more common than it currently is, hence looking for indexation at some point (though I personally don't think it is going to happen until the $3 million balances are say 20% of super holders)

That was Taylor's argument on Insiders and should have been ridiculed more. Given that he's said that the Libs would repeal this completely how can he not think that future governments won't be able to simply change the cap or index it? F***ing dickhead.

 

[Father Jack]

The LNP have seen this as a golden opportunity to win back the youth vote