Superannuation Discussion + market volatility

[QF WP]

Centrelink have the right to access ATO income tax records, so for me, not worth the risk - she has disclosed her husbands earnings in her CSHC application.

Centrelink can apply to have the overpaid amounts refunded, plus penalty interest for non-disclosure under the Act. Not sue what they can do with reduced pharmac_ scrips etc, as not had a CHSC overpayment client (only 1 under Age Pension).

 

[mrsterryn]

CHSC they can and do datamatch with ATO.

Post automatically merged: Jun 21, 2022

Centrelink have the right to access ATO income tax records, so for me, not worth the risk - she has disclosed her husbands earnings in her CSHC application.

Centrelink can apply to have the overpaid amounts refunded, plus penalty interest for non-disclosure under the Act. Not sue what they can do with reduced pharmac_ scrips etc, as not had a CHSC overpayment client (only 1 under Age Pension).

The PBS lack of entitlement is not a recoverable debt by Centrelink as the benefit isnt governed by Centrelink. However the ad hoc monies can and are recoverable

 

[JohnK]

Your rationale for that comment is?

Quite a bit of recent discussion + speculation with a new government in power.

They've run out of assets to offload. What can they hit next?

 

[JohnK]

Apologies if question is naive.

PCan someone please tell me if indexed superannuation is costing the taxpayers anything? I know someone who used to work at Australia Post for many years and his wife in public service and their pension combined is something like $220,000/year. Is public service super footing that bill or does that come from taxpayers?

 

[QF WP]

Depends on whether their superannuation was a funded benefit (ie. the employer actually contributing to their superannuation fund) or it is an unfunded benefit (no defined contribution made, benefit coming from the public purse, ie. consolidated revenue). That difference also indicates whether its a tax free benefit or taxable (as in the case of unfunded benefits)

 

[mrsterryn]

I posted in wills and estate thread but posting here as well. Apologies if question is naive.

PCan someone please tell me if indexed superannuation is costing the taxpayers anything? I know someone who used to work at Australia Post for many years and his wife in public service and their pension combined is something like $220,000/year. Is public service super footing that bill or does that come from taxpayers?

Coming from their superannuation. CSS or PSS
He must have been socking away that maximum for many years

 

[andye]

Coming from their superannuation. CSS or PSS
He must have been socking away that maximum for many years

My understanding is that Australian govt defined benefit pensions do have an underlying fund.
This is different to the UK where the pension funding all comes from general taxation.
We were very lucky to move our NHS defined benefit pensions (which some there consider generous) out of the government scheme just before that option closed off

 

[JohnK]

Coming from their superannuation. CSS or PSS
He must have been socking away that maximum for many years

That's 2 of them together. One on $120,000 the other on $100,000.

By the way they did contribute to these super funds but no more than a what a private sector employee contributes. Their award stipulated 80% super of the the average salary the past 3 years before retirement.

I'd be disappointed if taxpayers were funding these public service super payouts. I've been paying the government contribution since 1992 and I'd be surprised if I had more than $500,000 in total when I retire in 6-7 years. Any more losses between now and then and I won't have much at all.

 

[Flashback]

My understanding is that Australian govt defined benefit pensions do have an underlying fund.
This is different to the UK where the pension funding all comes from general taxation.
We were very lucky to move our NHS defined benefit pensions (which some there consider generous) out of the government scheme just before that option closed off

Yes, Mrs FB has a civil service pension and it is ......... rubbish. I'm her pension plan, apparently!

 

[VPS]

Quite a bit of recent discussion + speculation with a new government in power.

They've run out of assets to offload. What can they hit next?

if they can't get rid of negative gearing then there is no way anyone is going to get an inheritance tax back in again unless they make some other major changes to the taxation system.

 

[mrsterryn]

That's 2 of them together. One on $120,000 the other on $100,000.

By the way they did contribute to these super funds but no more than a what a private sector employee contributes. Their award stipulated 80% super of the the average salary the past 3 years before retirement.

I'd be disappointed if taxpayers were funding these public service super payouts. I've been paying the government contribution since 1992 and I'd be surprised if I had more than $500,000 in total when I retire in 6-7 years. Any more losses between now and then and I won't have much at all.

No disappointment needed
As an ex public service who also contributed we could pay extra after ten years service and our employor would add a bit more to our super. Husband did that for a long time

 

[clifford]

I've been paying the government contribution since 1992 and I'd be surprised if I had more than $500,000 in total when I retire in 6-7 years. Any more losses between now and then and I won't have much at all.

Perhaps you should have joined the public service .

 

[CaptJCool]

Apologies if question is naive.

PCan someone please tell me if indexed superannuation is costing the taxpayers anything? I know someone who used to work at Australia Post for many years and his wife in public service and their pension combined is something like $220,000/year. Is public service super footing that bill or does that come from taxpayers?

well No and Yes

in the first instance the former employees contributions and earnings are utilised and in the CSS scheme lasts about 10 years.

for example, the CSS Scheme closed in 1990 is Shrinking. And in 2021 no reversionary figures (usually 67% of member pension) were provided but there is a trend there to suggest it’s around 20-24,000.. the total bill not yet $4.5 billion)


Each fund has a cost report undertaken every 3-5 years

https://www.finance.gov.au/government/superannuation/superannuation-costs-and-reports

and the Future Fund was set up to address unfunded liabilities. It’s yet to be drawn on.

telstra shareholders funded a portion but budget surpluses did too prior to the GFC. Primarily it’s been investment earnings SINCE THEN. Detailed figures here...

https://www.finance.gov.au/government/australian-government-investment-funds/future-fund

the former LNP Government said no withdrawals until 2026-27
the new ALP Government is expecting to withdraw annual earnings from now on, which under the legislation they can, post 1 July 2020.

 

[VPS]

As SA government employee in the 70s you would not offered super if you were female. I have thought about suing the SA government just to create some publicity but never got around to it

 

[SydneySwan]

Yes, Mrs FB has a civil service pension and it is ......... rubbish. I'm her pension plan, apparently!

It sounds like you may need to up your game!

 

[JohnK]

Perhaps you should have joined the public service .

Funny you say that.

in the 80's most people I knew would stay away from government jobs as the salary difference to private sector was huge. Then in late 90's the salary for government jobs almost caught up but it was clear the pension scheme was going to be huge benefit.

Unfortunately by then most defined benefit schemes weren't taking new enrolments.

 

[Captain Halliday]

For those who are struggling to understand why their “balanced” or “conservative” super funds have fallen in line with the market, or perhaps more, this story might give you a sense of why:

Why superannuation losses will be worse than we think

A mood of despondency has settled over financial markets and there appears to be little room to hide, making life extremely difficult for investors, including those depending on their retirement assets, writes Ian Verrender.

www.abc.net.au

Spoiler alert: the writer opines that it’s only going to get worse.

 

[tgh]

it’s only going to get worse

Indeed.. but when ?

There have been correction forecasts floating around for a long time, who remembers Lord Reese-Moggs Great Reckoning ?
I swallowed it hook line and sinker and Armageddon never came ( It did help me to be a disciplined and conservative financial planner tho...)

The Great Reckoning

Buy The Great Reckoning by James Dale Davidson, Lord W. Reese-Mogg, PaperBack format, from the Dymocks online bookstore.

www.dymocks.com.au

 

[SydneySwan]

it’s only going to get worse

Indeed.. but when ?

There have been correction forecasts floating around for a long time, who remembers Lord Reese-Moggs Great Reckoning ?
I swallowed it hook line and sinker and Armageddon never came ( It did help me to be a disciplined and conservative financial planner tho...)

The Great Reckoning

Buy The Great Reckoning by James Dale Davidson, Lord W. Reese-Mogg, PaperBack format, from the Dymocks online bookstore.

www.dymocks.com.au

There are always doomsayers just like there are always those telling you that the only way from here is up. No-one really knows. Ian Verrender is a credible journalist but he would tell you that doesn't mean he is going to be right.

My pension super fund hit its most recent peak in early January and as at today is down 7.2% (adjusted for monthly pension payments) from that peak. My smaller accumulation fund is down 7.4%. Compared to end of June 2021 my pension fund is up 1.1% and my accumulation fund is up 0.5% (both adjusted for withdrawals, contributions and contributions tax). Both funds are industry super balanced funds. Compared to some here it looks as if my pension fund may have done a bit better but that is more to do with my good fortune and the management of my industry super fund and who knows it that is going to last? I certainly don't.

So what should I do - ride it out or go to cash? I have a friend who went to cash in Feb 2020 and was very pleased with himself as the markets tumbled in March / April 2020. He kept telling me I should have listened to him but then he missed the rapid rise in 2020 and is still in cash. Because of monthly pension payments his fund balance is now much lower than when he first went to cash in Feb 2020. Despite my monthly pension payments my balance is now much higher despite undergoing whiplash in 2020.

Each to his own but most of the investment mistakes I have made in my life are by taking action when I should have not taken any action. I am generally prone to procrastinate so if I went to cash I would expect to miss the boat as markets surge as at some point they surely will again. So I will ride things out. If this time is different then so be it. I won't blame anyone else. These are my decisions and I am comfortable with them.

 

[JohnK]

For those who are struggling to understand why their “balanced” or “conservative” super funds have fallen in line with the market, or perhaps more, this story might give you a sense of why:

Why superannuation losses will be worse than we think

A mood of despondency has settled over financial markets and there appears to be little room to hide, making life extremely difficult for investors, including those depending on their retirement assets, writes Ian Verrender.

www.abc.net.au

Spoiler alert: the writer opines that it’s only going to get worse.

I think most us knew that GFC was not over and have been waiting for next instalment. Most were predicting it was going to be 2017 but that did not eventuate.

Stock markets are a mess. The value is obviously overstated so that people are happy their investments are growing to keep them happy.

The reality is that we have been conned and continue to be conned. If there was a serious crisis and everyone wanted their money the world markets will collapse as there won't be enough buyers or money to cope with that demand to sell.

Yes that may well be a twisted view of world economics but its reality. We are too busy to notice what's going on around us. I should just take everything out as cash but even that isn't safe any more.