on 04-09-2016 10:30 PM
Noel Whittaker has swallowed the government line. He says that $1.6m invested at inflation plus 3% will provide 4* pension for 25 years. So, be happy!!
I am planning on being around for much longer than 25 years - or so the actuary says, based on my age, state of health, family longevity and advances in medicine.
The assumed return of inflation + 3% may well have been a doddle in past years, but returns have declined in recent times.
The Government's and Whittaker's assumptions may well work out OK on a population basis, but I'm an individual and have to look at longevity and return risks. Why not be more generous to protect against those risks, but impose a heavier death duty?
Labor's approach of allowing tax free income of $75k removed the return risk and would be much simpler to administer. Their problem was that $75k was far too low - $100k might have been acceptable.
on 05-09-2016 01:28 PM
Regarding the Noel Whitakker article, there are a few points I feel compelled to express. I have read similar comments, but usually in Government media releases or Ministerial speeches. While reporting on the policy objectives there is no acknowledgement by Mr Whitakker that this is not good government --- in fact it is an excellent case study in poor government.
Prior to the budget there was some discussion with stakeholders on changes to superannuation, these involved Transition to Retirement, limits to concessional contributions, changes to contributions tax, changes to CGT in super funds. There was no discussion with stakeholders on the centrepiece announcements of the budget. Theses policies were developed in a vacuum and now the Government must work, “retrospectively”, to convince even its own party that these changes are worthwhile!!!
I trust that during Mr Whitakker’s visit to Canberra he also took the opportunity to express the concerns of his clients, especially regarding:
- the destruction of confidence in Superannuation,
- the inability of people to act in compliance with existing superannuation law as backdating to 3 May 2016 remains the government intention,
- the fact that under the proposed rules many people will not be able to reach the $1.6m cap,
- the fact that Treasury, the ATO and Ministers cannot answer many of the detailed questions being asked, and
- the further delays in having even draft legislation prepared for review, while the best we can hope for is legislative certainty by March 2017.
If I have to pay more tax let it be part of a broad fiscal plan, not just a ‘policy objective’ focussing on superannuants or any other one percenters.
on 13-09-2016 04:09 PM
JohnB, I'm pleased that you have picked up on the ficticious returns of inflation plus 3%.
It appears that the average industry and retail fund return over the last 7 years has been just 2.9%. And I'll bet that is before fees, so its more like 1.9% which is less than inflation.
There is so much "advice" being given assuming returns of 6.5% when its clear that its likely to be zero after inflation, if not less.
Meanwhile, back in the SMSF world, I'm expecting a return of about 7% this year - and this will be my lowest positive result since 2001.