Is money in your pocket better today or tomorrow? 76



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If given the choice, would you take $63 a week today, or leave it in your super for a rainy day?

The federal government is being urged to consider plans to overhaul superannuation for low income earners, providing them with the option to opt-out of compulsory superannuation. The idea stems from the notion that low income earners will never have enough super to avoid the pension in retirement. The plan, which would ultimately target part-time and casual workers on less than $37,000, would hand an additional $63 a week or $3,324 per annum to those that opt-out.

For those earning under the tax free threshold of $18,200, the plan would mean an additional $32 a week and the avoidance of the controversial $500 tax penalty, requiring some low income worker’s tax refunds to be paid directly into their super account.

For those that this plan targets, $63 or $32 a week, is enough money to make a real difference to everyday living, today.

“We’ve had the kite-flying of using super to pay for your HECS debt and your mortgage. But we’ve got to put away as much as possible as we can today to get the advantages of compound interest.”

As part of a whole of superannuation system review, Treasurer Scott Morrison is considering plans to reduce superannuation tax concessions for the rich, to help fund these new plans and others targeting middle-income Australia.

But it begs the question, shouldn’t we all be saving for a rainy day?  Should we all not do our bit to save for our retirement, however big or small? Will the age pension be enough for people to live by. Many consider the current pension to be below the breadline anyway, so are we not all better off saving up whatever we can to top up the pension later in life?

It’s a hard decision. The appeal of that extra money today and what it may do for more food on the table or more bills getting paid, is hard to ignore but it does tend to push off the requirements of tomorrow for another time.

Should we support the idea of an opt-out system of superannuation for low income earners or do all Australians have an obligation to compulsorily save for their retirement?

Starts at 60 Writers

The Starts at 60 writers team seek out interesting topics and write them especially for you.

  1. Sounds to me that they are going to try to boost the economy, with low income earners money, if they go ahead with this plan they have to insure that future Governments are prepared to pay these people a pension, on one hand they are telling older Australians that cannot afford us and want to cut the CPI rise in our pensions, on the other hand they are making sure low income workers will have no choice but to go on the pension

    6 REPLY
  2. I am a casual employee and manage to contribute an extra $150 per month to my super in addition to employer contribution. If the above proposal came into being I would save it for a rainy day.

    2 REPLY
    • while I aplaude your endevours to save, there are many younger low income workers who do not own a house and what will their be future be with no super at all, I think it is a despicable plan by despicable Government

    • An excellent plan – but what makes anyone think that employers will increase what they pay on a casual award rate. At present, super is paid by employers on top of the wages, it’s not PART of the wages. So they will just keep it, unless it is written into some agreements. And tbh, I wouldn’t trust anything that this LNP govt says about giving extra to casuals. They are already trying to cut rates and conditions, why on earth would they force any businesses to pay the super amount directly to the employee ? When you get to pension age, they’ll then blame you for not saving.

  3. No way should people do this. The pension will not exist in the future.

    2 REPLY
    • While ever taxes are paid the pension will exist for those who are eligible and rightly so.

    • Not if this Liberal Government has its way Beri Vera, you told everyone many times you work for Centerlink, you must deal low income workers all the time, this is a quick hit for them now that these low income workers will pay for in the future, they will have no security in their old age

  4. Unlike many I see no evil intent by government to target older Australians.

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    • Neither do It. This is mostly aimed at young working people.

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      • Are any of you casual ? I have been for most of my working life. I have some super because I have made my own. As a casual you have to earn $450 in a month to qualify for the business to pay super. Have a guess how many businesses make sure their casuals earn less than this amount. So we lose out every way you look at it.

  5. With the current performance of the stock market and the lack of growth in Superannuation, it is likely that in the short term their superannuation balance will be reducing, not growing beyond deposits made. So from that point of view I’d think it has merit. Maybe for someone over 50 it might give them a boost in income to get those house repairs done, mortgage paid prior to retiring. However, even a low income earner putting money into super at a young age will accumulate a bit of a nest egg by retirement, who is to say that low paid 20 year old will be low paid all their life. Not a good idea for everybody and rather like the Public Service Pension that the Liberals changed the rules around, the historic context of the changes are ‘forgotten’ and the wage amount will be counted alone in wage negotiations forgetting what was given up to get the higher wage.

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    • That was my thought too Barbara. 40 or 45 years of super has to be worth something at the end, and might be the difference between a full pension and part pension

    • They are going to rob these young people of any sort of comfort in their old age, for a quick hit now to retailers

    • And to make the economy look stronger. Someone must have told them consumer and business confidence is down and we’re heading for a recession. They wouldn’t be able to work it out themselves

    • that was my immediate thought when I read the article, they are going to use these people and their money for their own political advantage, the economy is in a bad way at the moment, and business confidence has been down ever since this Government was elected, they got a short boost when gave small business an open cheque book to spend and claim it on tax but those retailers were buying off each other. Australians are not spending anymore and unemployment has risen again after the Christmas rush

  6. Please bring on an election & vote these crazy people out. Any savings for people is a good thing, having a small nest egg on retirement years is better than nothing. Trying to live on a pension alone is poverty, even though many are. Pensioners are still paying rent, god help them. I will be in that position soon, but have a small super to top things up a bit. But I wished govs will stop targeting low income citizens who already feel insecure & stressed.

    1 REPLY
    • And their stand on Education means they can never afford to go to Uni to study for a better well paid job. Or to “better their station” I think that’s the idea. Keep them poor and uneducated and they are easier to manage.

  7. Super was never intended to totally replace the pension, unlike what has recently been stated by the current treasurer. It was intended to supplement the pension because even as far back as 1990 it was recognised that retirees would have difficulty living only on the pension. Obviously for some people it does totally replace the pension, depending on how much a person can save over their working life & hopefully I will be one of those, but even a small nest egg will make a huge difference to many lower paid workers or people on casual work. It’s clearly an effective method of saving, but this govt seems determined to ensure that people on low incomes are punished as much as possible & made to stay struggling.

  8. This is just another attempt to sell off to private enterprise.
    Will we ever learn?
    The reason all these schemes are being proposed is because we no longer derive income from ownership or shares in anything anymore.
    They keep trying to make this work, yet, with all their degrees, they don’t seem to understand that the principle is not to reinvest unless there is a healthy tidy profit.
    The motivation for community advancement could hardly be put under a greater handicap.

  9. How can this be a good idea? It gives low income earners a bit more to live on but nothing when they retire. Isnt that a problem now? It helps business because they dont have to pay a better wage like they should. It helps the government because they dont have to do anything and they quite frankly don’t care what happens to Australians once they retire. So those young ones who think the government is great, it means if you cant save now, you can put yourselves in the baby boomers shoes. You wont have anything to retire on.😠

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  10. At my age money in the pocket today would be great

    2 REPLY
    • do you work? and do you own your own home? because younger low income earners will never own a home and if they spend their super now they will have nothing in old age

    • Mkke here-Unless they can borrow against their super for their home loan, to be paid back as a low interest mortgage

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