Labors Super changes

[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...

A term of life income stream is valued on life expectancy (commutation factor)

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/01/2015

Last amended: 15 December 2009 How to use life expectancy tables The following table shows how to select and use the appropriate life expectancy table in the assessment of an income stream. Step Action 1 Determine the commencement day of the income stream to be assessed and ensure that the...

clik.dva.gov.au

Using the Defence Fund, those factors are 19.22 for men and 22.05 for women at age 65, Representing a yearly payment of $156k for men and $136k for females to exceed $3million.

So while it is in Accumulation phase, women would be subject to a lower salary threshold than men, simply because the present value of a $100 guaranteed for life is more for a woman than a man.

Back to your original statement, yes men and women are treated differently.

But in this particular benefit design, the member doesn't even notionally earn interest or income for an additional taxable component!

 

[Kanga Commando]

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.

ok - thanks

If i get some more info i will post it back.

TBH - i have a bee in my bonnet about the way women are (poorly ) treated with regards to super, so maybe this is just me being overly cautious.

 

[Gough]

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

Given their attitudes towards woman and the yoof in government I tend to think this argument is so patently opportunistic that it could turn more people away from them.

 

[Home Alone]

ok - thanks

If i get some more info i will post it back.

TBH - i have a bee in my bonnet about the way women are (poorly ) treated with regards to super, so maybe this is just me being overly cautious.

They generally are.

In your example, that yearly payment would broadly be based on something like Final Salary X (2% of contributing service).

Retire on a $100,000 salary with 35 years service, get a $70k for life. Miss 5 years to raise a family, so only 30 years service and that pension is only $60k.
(using the factors above, has a notional benefit value of $200k to the member). Not to mention that 2 promotions would probably be missed, so that Final Salary would be impacted as well.

 

[ralphmalph]

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

Nothing captures the imagination of the younger generations like varying a concessional tax on super balances of >$3M.

 

[Kanga Commando]

They generally are.

In your example, that yearly payment would broadly be based on something like Final Salary X (2% of contributing service).

Retire on a $100,000 salary with 35 years service, get a $70k for life. Miss 5 years to raise a family, so only 30 years service and that pension is only $60k.
(using the factors above, has a notional benefit value of $200k to the member). Not to mention that 2 promotions would probably be missed, so that Final Salary would be impacted as well.

Thats pretty much it.

From a tax perspective we have a concept of income splitting. I would like to see that applied to super so that women dont miss out when they are on leave - ie partner contributes to stay at home mum super, pre-tax.

Ideally, the concept of "stay at home" should include those on temporary leave, or, permanent stay at home. The life of a housewife should be valued properly under tax AND super rules.

Again, this doesnt effect me although I would have liked to have contributed to wifey's super. Now that she is over 50 she is well and truly behind me on super... We now salary sacrifice quite a bit.

 

[Not Important]

one can only hope spud decides 2 defend the super-rich at the next election. assuming he’s still the leader of course.

 

[HurleyHepsHird]

one can only hope spud decides 2 defend the super-rich at the next election. assuming he’s still the leader of course.

Yeah, it's a wildly popular low impact policy that improves the bottom line and makes the LNP (even more) unelectable.

I've even seen support from the rentier class in various Fairfax rags.

Putting off changes until after the next election has largely snookered the opposition. Dumb pricks will still bite though.

 

[Festerz]

Great opinion piece by Mark Kenny in Sunday's Canberra Times, these lines in particular:


You will recall that in office, the previous government demonised "the Canberra bubble" - Scott Morrison's Australianised version of the 'Washington Swamp.'

Awkward versions of corruption, secrecy and incompetence were routinely dismissed as the'bubble' intrigue of Canberra elites.

Colour-coded spreadsheets for rorting local grants? 'Canberra Bubble'

Caught secretly trying to get your Penacostal paster in an exclusive White House dinner? 'Canberra Bubble.'

Secret Ministeries? 'Canberra Bubble'

But now the real bubble has finally emerged. It lives the Coalition's reflexive loyalty to its wealthiest backers - some with hundreds of millions already parked in super and millions more being ammassed annually, its earnings taxed at mates' rates because, well, it's for retirement'.

Outside this bubble are ordinary PAYG households, many of them underpaid and/or underemployed. Ordinary millennials and GenZs with burdensome HECS-debts and no realistic proposition of home-ownership. Retirees clinging on with the age pension of just $1026.50 a fortnight for a single.

Superannuants on modest annuities from their accumulated retirement nest eggs. And of course the jobless whose devilishly restrictive assistance tops out at $668.40 per fortnight or less than $48 a day.

Ask yourself wtf the Liberals under Dutton are so keen to, as the Treasurer put it, 'go to war' for one half of one percent of people with more than $3 million in their super accounts. And in the same week that we heard yet more damning evidence of how the Liberals went to war against the most vulnerable in society for years chasing down debts that never legally existed, using lies and cover-ups as their camouflage.

The answer is the same as it was when Morrison was leader and Turnbull and Abbott before him - they don't give a flying feck about the poor.

THIS is the Liberal Party under Peter Dutton.

I've stepped in day old dog shite that had a better smell about it.

https://pbs.twimg.com/media/FqaSlR2aMAEkyH5?format=jpg&name=large

 

[Schneebly11]

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

Right up there with “let’s keep the housing bubble going”, “let’s ban tik tok” and “let’s re-introduce conscription”.

The youth will certainly be attracted to a policy that will only affect them if they are on a minimum salary of $200k every year between age 21 and 67, and then put an extra $30k per year in voluntary contributions in their super account on top of that. Every young person is 100% sure that’s the finances they’ll be planning their future on……/s

 

[cartwright]

Reminder;
low wage growth was "a deliberate design feature of our economic architecture''.

~ Mathias cormann.

But yeah, they’re worried about your super.

 

[Father Jack]

Reminder;
low wage growth was "a deliberate design feature of our economic architecture''.

~ Mathias cormann.

But yeah, they’re worried about your super.

Any excuse to post this again:

 

[peetoo]

Any excuse to post this again:

I’m wondering if I’m aspirational or envious ….confused

 

[kickazz]

one can only hope spud decides 2 defend the super-rich at the next election. assuming he’s still the leader of course.

Given the small number of people this negatively effects, I find even those numbers to be low. Only 80% of ALP voters approve? Probably status quo bias.

Perhaps if the question was phrased "Do you approve of income derived from (your) work being taxed higher than that from capital" the numbers might be different.

Either way, seem like this one is a common sense slam dunk.

 

[Mofra]

Nothing captures the imagination of the younger generations like varying a concessional tax on super balances of >$3M.

Pretty sure I heard Kram yell this out at a Spiderbait gig in the late 90s

 

[ralphmalph]

Pretty sure I heard Kram yell this out at a Spiderbait gig in the late 90s

Kram from Spiderbait or Kram ?

 

[Mofra]

Kram from Spiderbait or Kram ?

They're different people?

 

[Gethelred]

There is a winner here, the landlord as the property value increases.

Is that due to superannuation or to the current property as investment status quo?

 

[Kwality]

Is that due to superannuation or to the current property as investment status quo?

Not either/or.
Substantial savings in obligatory super that add to the difficulty of getting a foot on the ladder of home ownership.

 

[Kwality]

Given the small number of people this negatively effects, I find even those numbers to be low. Only 80% of ALP voters approve? Probably status quo bias.

Perhaps if the question was phrased "Do you approve of income derived from (your) work being taxed higher than that from capital" the numbers might be different.

Either way, seem like this one is a common sense slam dunk.

The devil is in the detail & Mr Chalmers is not across the detail - another case of unintended consequences, like the 2018 effort from Mr Shorten. Good idea in theory, destroyed by the detail.

 

[kickazz]

The devil is in the detail & Mr Chalmers is not across the detail - another case of unintended consequences, like the 2018 effort from Mr Shorten. Good idea in theory, destroyed by the detail.

I don't buy that "unintended consequences" crap. It is just what do nothing Conservatives say to scare people.

Of course there are details to be drawn out and dealt with. Of course there will be some peripheral effects. And so like the intelligent adults we are we confront them and deal with them.

If we wanted perfection from the outset on every single thing we do, nothing would get done.

I'm confident we'll be fine on this one.

 

[Kwality]

I don't buy that "unintended consequences" crap. It is just what do nothing Conservatives say to scare people.

Of course there are details to be drawn out and dealt with. Of course there will be some peripheral effects. And so like the intelligent adults we are we confront them and deal with them.

If we wanted perfection from the outset on every single thing we do, nothing would get done.

I'm confident we'll be fine on this one.

Thats why taking it to an election in 2 years time will allow that process to be addressed.

 

[Baltimore Jack]

I don't buy that "unintended consequences" crap. It is just what do nothing Conservatives say to scare people.

Of course there are details to be drawn out and dealt with. Of course there will be some peripheral effects. And so like the intelligent adults we are we confront them and deal with them.

If we wanted perfection from the outset on every single thing we do, nothing would get done.

I'm confident we'll be fine on this one.

Here's the detail

If it previously attracted a concessional 15% tax, it now attracts a concessional 30% tax

 

[Kwality]

Here's the detail

If it previously attracted a concessional 15% tax, it now attracts a concessional 30% tax

That is a great example of not being across the detail.

 

[Crankyhawk]

Not either/or.
Substantial savings in obligatory super that add to the difficulty of getting a foot on the ladder of home ownership.

The flip side is the inflation of prices if people can tap the super easily (ie using super to contribute to the principal)
Though I would be open to allowing it to be used for a primary residence home you have held a mortgage for already (?12-24 months) so it means you had to buy within means then use super to reduce the home mortgage (which is debt with no tax write off)