Superannuation and the Cooper Review
July 7, 2010
No doubt you have heard of many of the changes proposed, mooted and made up in the press of late to our superannuation laws.
I have also been listening with interest (as always) to what my clients and prospective clients are saying about superannuation and what it is and means.
First point – superannuation is not an investment, it is an ownership structure – few people seem to get that – a superannuation fund (be it industry, retail wholesale or self managed – and a lot of commentators don’t know the difference between those also) is just a way to hold your assets until you retire. Those assets can be shares property of fixed interest investments to name a few.
Many people, particularly those with little more than headline knowledge – by that I mean all they know is what you learn from reading a headline don’t like superannuation because of the changes and they think the government will do something to make it all different – whatever that means.
I will agree there have been a lot of changes, some fairly dumb such as the caps on contributions and the taxes you will pay if you exceed those caps, and some changes which have been exceptionally beneficial for those of us who plan to live past our retirement age – in particular take note of the tax fee status of all pension payments available to those over the age of 60.
The changes outlined in the Cooper Report are still being digested (and still actually need to get past an election and approval from both houses of Parliament), with some saying it will lead to a dumbing down of the industry and a lack of interest by Australians in their retirement planning needs – I tend to agree, although I think we may also thank Captain Obvious for his input on the lack of interest point.
On a day to day basis I am also not sure that the changes will impact on fund members as much as they will on industry participants, but that’s not a concern for you as a fund member – you really need to ensure that you plan for the future and have an understanding of how you will live once your ability to earn an income stops – make no mistake that day is closer today than it was last week.
As a result of any changes, there is one fact that cannot be ignored. If you plan to live past your last day of work – you must have some type of retirement plan in place.
The future is pointing towards us all being more self sufficient in our retirements – if you think the aged pension is enough to live on – have a look at the centrelink benefits - you wont go hungry, but the twilight years are going to be fairly dim if you don’t plan to be self sufficient in retirement.
One also only needs to look at the size of our deficit to know that either taxes will need to rise or government services cut to pay that off – government services includes aged pension payments.
Perhaps I am wrong – talking to a lot of Australians, I get the view that many don’t have much to look forward to in retirement – are you like that or do you know what your retirement is going to look like?
Denial should only ever be a river in Egypt, not your retirement strategy.
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