Future proof or fool proof – Part two

For those who have yet to retire the real crux of the matter is: do you really believe superannuation in

For those who have yet to retire the real crux of the matter is: do you really believe superannuation in its current form will be with us in 10 years time or even five years? Of course not, no government can resist the temptation to get their hands on the trillions of dollars in superannuation funds. Having got their hands on the money, superannuation will be paid to a retiree in a revamped, renamed pension.

Those who are at the beginning of the road to retirement, or those stuck mid way will experience many more changes to the superannuation system before the great day. Who says the age for retirement won’t reach 80 years of age eventually?. Do you realise that when the pension system was established in 1909 the age for retirement was set at 65, but life expectancy was around 55 years? Therefore you were statistically expected to be dead before claiming the pension. That being the case with life expectancy currently being about 85 years the age to receive a pension should be 95 years. Who knows in 50 years what will be the retirement age.

But this article is not about the above, it is about the recent statements made by the government that the changes were intended to ensure superannuation was future proofed. This is a ridiculous statement unless the government have control. It is not their money to start with. As we all know, superannuation payments are made by the employer for the benefit of the employee; the employee does not pay. The employee may if they so desire pay additional money into their fund. The idea being by the time an employee is ready for retirement sufficient money has been collected to fund a decent retirement. All this has nothing to do with the current age pension, they are two are separate issues. At this point I should say that I do not consider the age pension to be welfare, notwithstanding the recent government has tried every way to convince us it is. Current age pension recipients have done their bit, paid their dues without all the hand outs and subsidies currently available and purchased houses when interest rate were as high as 21.5 per cent.

I am totally confused by how the government can say the new changes to superannuation will realise $3 billion in savings. How can savings be made for the government when the money is not theirs in the first place. The government must mean the changes to superannuation will secure more in taxes as this is the only income for a government, giving them a nest egg of $3 billion they would not otherwise have. How does this future proof superannuation? It just doesn’t make sense with the statements that have been made. Drastic changes have to be made to the superannuation system before anyone can say it is future proof. I think the treasurer is playing with words, tongue in cheek knowing the system is currently doomed. Let’s face it, as things are now the vast majority of Australians will not have sufficient superannuation to support retirement, far from it.

Then we come to superannuation averages as posted recently on Starts at 60. The figures quoted could not be further from the truth. They are impossible to believe. This is not an argument about age pension, remember this is about superannuation averages. Let’s say there are 2.5 million Australians on an age pension of some kind. About 800,000 are on a full pension, which by definition means they have an asset value from zero to $375,000. The vast majority seem to have assets between $375,000 and $816,000. Over $816,000 in assets and the numbers drop away quickly. Therefore, based on the law of averages it would be impossible for the current superannuation average to be as stated in the article. I trust the government is aware there are thousands, if not 10 of thousands, of people who have no assets to speak of and live hand-to-mouth each day.

The Age recently stated the average Australian has superannuation of $42,000 (APRA). The tax office believes it is $108,000. But if you are between 60 and 64, the Bureau of Statistics states men have an average of $377,000 and women $215,000. This means a couple about to retire have on average of approximately $500,000 between them. I cannot believe these figure are for real. At the beginning of this article, I said figures regarding this subject have been cleansed and massaged to a stage that they are unrecognisable. Anything can be done with numbers and this appears to be a classic example.

The chairman of retirement income at investment fund Challenger appears to have the arrogance to say the compulsory system of superannuation is working well and will ensure retiring Australians will have the right amount of money saved for a comfortable retirement. I cannot believe someone in that sort of position would make such a statement and I will leave that where it lands.

This brings us nicely to the last article I read on Starts at 60, which was about early retirement for a select group — the group being Aboriginals and Torres Straight Islanders. They are asking for the retirement age to be lowered to 55 years because they have a lower life expectancy. We have already pumped billions of dollars into Aboriginal and Torres Straight Islander communities. The problem must be solved from within the communities not by varying the system. I believe the problem of the lower life expectancy must be solved and retirement age not changed to cater for it. Enough is enough. No Australian should have special treatment, no matter where they come from and Senator Rachel Siewert who has tabled a petition in support should be advised accordingly. I think she has a problem if she believes this is the way to go.

There are so many problems to be sorted through regarding pensions, superannuation and retirement in general. Most are long-term issues and I know a lot of people will blame the government and argue the excessive pension arrangements available for those who represent us. Complaining about such arrangements will not achieve anything. Finding a way to change them will and that is what we should concentrate on. At the end of the day we are all responsible for our futures and I wish those who follow us good luck, and those who, like us are retired, a good, long and happy retirement. Remember you can not take it with you so enjoy the day.

Do you agree with Paul here? Do you think we need to change our super and pension systems?

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  1. Suzanne Milford  

    Interesting that Paul quotes the current super value for a retiring couple when a lot of us are single. I don’t think I can retire at all, as a 63 year old single female.

    • Marie  

      Well that’s OK. I have recently retired at 72. I didn’t think I could retire either, so what’s new? If you are healthy and able go for it. I didn’t start Super contributions till I was 48 (spent my off time looking after our children – then, sadly, divorced) – I made up the super to 12%. When I retired I had enough to pay off my house ($300,000) and invest $200,000. I wasn’t lucky, I worked hard and studied hard (at 45 mind you) and did NOT spend up big. I had occasional holidays (not every year by any means) and when I did it was only for a week – I could not justify the expense of any more. Anyone who is healthy can do it. It’s not HARD it just takes effort and thought.

  2. Jean Walker  

    To me, the only way to provide adequate pensions (which is what all civilised societies should do) is to be brave enough to tax the wealthy properly. But govt’s of any kind just won’t do it because they fear losing influential voters and election donations.

    Scandinavian countries and the Netherlands top the poll as the best countries to live in. What do they do? They tax people highly and according to their income and out of that provide totally free high standard health, child care, education to tertiary level and good pensions. Therefore people do not need a great deal of disposable cash and don’t need to worry about saving for their old age. To me, it’s s a simple equation but not one any Australian gov’t will ever adopt.

    It isn’t true that we can’t afford pensions. That’s rubbish. It’s just that gov’ts spend money on other things that are less important and decide they can hit the most vulnerable instead of big business and the wealthy. There is something fundamentally wrong with any gov’t that does not care about its old and vulnerable citizens.

  3. Paul, I agree. Money is not theirs so they,the government, can’t be saving anything. Their plan as we all know , to increase the taxes on money that has already been taxed is their way to the future. I wouldn’t call it future proofing for the retirees but it is guaranteed future proofing for the government. Some recent figures quote couples as needing $55,000 pa. for a comfortable lifestyle in retirement. If that it to continue for 20 yrs then the couple needs at least a million in superannuation.For singles the figure is quoted as $35,000 for a comfortable retirement so a single person would require at least $700,000 for twenty years. Of course what the government had always hoped was that with compulsory super then the government would not have to come up with any pension support.

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