Superannuation Discussion + market volatility

[CaptJCool]

Media Release 20 April 2023 - ASFA

Superannuation delivering for Australians

www.superannuation.asn.au

ASFA released an interesting analysis based on Dec 2021 age pension data
This indicates at most 42% of those turning 66.5 go on age pension

This depends on which population figure one uses to determine this result
I did a calculation with Census pop data and with Electoral Commission voter numbers data
These came up with 33% and 39.9%
By December 2022 age pensions numbers for 66-69 were lower again than Dec 2021, the inbound rate is running around the lower figure - barely 33%

The older age brackets are going higher suggesting some head onto age pension later in life (after the super has run out (noting 75 today would have been 45 in 1992 when compulsory super started this likely to have contributed for 15-20 years only)

The other interesting sentiment is as surviving spouses occur, they are pushed off the age pension having doubled their assets upon death of their partner and reverting to the lower singles income/asset tests

Plus the death rate has gone up by 15% in 2022 as Covid flowed through after lockdowns plus masking were finally lifted

 

[JohnK]

Hey John
LSL on finishing your employment has “different tax rules”

Unused long service leave | Australian Taxation Office

www.ato.gov.au

Example 8 covers most situations

Examples | Australian Taxation Office

www.ato.gov.au

Depending on the amount it could take you into Medicare levy surcharge territory if you’ve not got private health insurance
Had someone else get so much he hit excess contributions tax plus of course the 30% tax going in with over $250,000 in the one financial year

As to compelled to take it

Transferring, taking and cashing in long service leave in Queensland | Business Queensland

www.business.qld.gov.au

Apparently if no agreement can be reached, it requires 3 months written notice in QLD.

Thanks @CaptJCool.

I sort of worked out that they would have to give me 3 months notice. I'm trying to avoid that scenario. Without going into too many details I'm not well off financially and if I am forced to take leave then I see that quite damaging to both my financial and mental well being. I don't need extra time off work. I need to work and save as much leave as possible for that rainy day.

If the situation arises then I'd have to try and see if I can arrange cashing in the long service leave but paid to superannuation account.

Note we can cash in 2 weeks annual leave each 12 month period. I did this 3 times during covid as we could not go on holiday. I can try take 2 weeks long service leave and cash in 2 weeks annual leave. That scenario would benefit both company and me.

 

[Brissy1]

Media Release 20 April 2023 - ASFA

Superannuation delivering for Australians

www.superannuation.asn.au

ASFA released an interesting analysis based on Dec 2021 age pension data
This indicates at most 42% of those turning 66.5 go on age pension

This depends on which population figure one uses to determine this result
I did a calculation with Census pop data and with Electoral Commission voter numbers data
These came up with 33% and 39.9%
By December 2022 age pensions numbers for 66-69 were lower again than Dec 2021, the inbound rate is running around the lower figure - barely 33%

The older age brackets are going higher suggesting some head onto age pension later in life (after the super has run out (noting 75 today would have been 45 in 1992 when compulsory super started this likely to have contributed for 15-20 years only)

The other interesting sentiment is as surviving spouses occur, they are pushed off the age pension having doubled their assets upon death of their partner and reverting to the lower singles income/asset tests

Plus the death rate has gone up by 15% in 2022 as Covid flowed through after lockdowns plus masking were finally lifted

Interesting. But the remaining 57.5% not going on the pension at age 66.5 is not necessarily an indication of the "success" of the retirement system being spruiked by the industry.

Easier now to get a job, easier to negotiate desired working arrangements, better average health at any particular age point (presumably), recent increase in financial stress due interest rates, inflation, increases in divorce rates. Yes, more people are working past 66.5

 

[docjames]

@JohnK i really think you should discuss with your super fund who may be able to advise you (before you discuss with company HR - who work for the company’s interests, not always the same as your interests). I think this was suggested up thread.

Most Industry funds (and a number of non-industry ones too) offer a free one-off planning session where they can do a basic overview of your super status, your future needs (based on what you tell them regarding your future life plans etc).

It really would be worth doing a one off free review (arguably at your stage and with future commitments to your family it would worth paying for - but at the very least take the free one, it’s not compulsory to follow their advice(!)), and sitting down with them with the specifics and running through a few scenarios (your preferred plan, “what if” I get forced to take LSL and rules re super contributions, “payout vs leave as taken” etc).

 

[MEL_Traveller]

Yeah…i’d be giving any discussion with ANZ a wide berth… one of their super products was recently listed as offering one of the worst returns out there (ANZ OneAnswer Personal Super).

 

[CaptJCool]

https://www.news.com.au/finance/superannuation/why-now-is-the-perfect-time-to-boost-your-superannuation-fund-and-reap-the-rewards/news-story/d3b3c0ba5f2db0da911077d8b737f1b5

Fascinating
Most the gains in 30 years occurred on just 10 (or 30) days!
And then that’s following a slide down of price
Mutters to self ….

 

[SYD]

https://www.news.com.au/finance/superannuation/why-now-is-the-perfect-time-to-boost-your-superannuation-fund-and-reap-the-rewards/news-story/d3b3c0ba5f2db0da911077d8b737f1b5

Fascinating
Most the gains in 30 years occurred on just 10 (or 30) days!
And then that’s following a slide down of price
Mutters to self ….

But this is the money shot or most important bit:

“This data shows us that if you want to invest for growth and success, you need to be investing constantly across all market conditions.”

No point trying to pick the bottom or top of a cycle (no one rings a bell for either).

Start investing early and invest regularly and enjoy the power of compound interest.

 

[mrsterryn]

Waiting to see how the defined benefits go up on July 1st

 

[mrsterryn]

I’m guessing that as usual it won’t be the full CPI amount.

It would be a huge jump if it was

 

[SYD]

Now I understand how it is calculated, I can see why it’s never the full rate.

CPI rates and your pension

Learn how the Consumer Price Index increase affects your pension.

www.csc.gov.au

So 3.3% seems to be the figure for me and her, anyway.

What were you expecting/missing? The couple of months lag between pension adjustment and the last reference CPI index value? eg the July increase was based on March CPI.

Yes, in the current cycle, it would be great to squeeze every bit of CPI increase in the July/Jan pension adjustments .

 

[SYD]

Wasn't expecting anything, it was just an observation, hadn’t given it a great deal of thought previously, I know I can’t influence nor change it, no more comments from me.

Oh, just quizzing the observation about not getting the “full rate” which I assumed was 1 qtr lag. I know, it’s a tad frustrating.

 

[dxwell]

This is the Surviving Spouse problem

Sorry for the necropost, but I stumbled on this thread late.
there is a terrible entitlement/generational theft vibe to that story.
a massive windfall, more cash in the bank than most Australians would ever see, but I want the government to continue giving me money, even though I have the means to self-fund

 

[CaptJCool]

Superannuation Discussion + market volatility

https://www.servicesaustralia.gov.au/commonwealth-seniors-health-card-income-limits-increase-from-4-november-2022 There will be a lot of applications I suspect

www.australianfrequentflyer.com.au

and so we have the March 2023 figures

2,592,695

Dec 22 was 2,576,580

age profile is this
age 66.5-69

1 July 2021 age raised to 66.5 so some people had to wait upto 6 months to become eligible after 1 January 2022...

despite this 6 month backlog, the number of recipients has been trending down (especially when approx 259,000 qualify each year by age)
every 3 month period approx 64,000 people become age eligible

December 2021 415,034
March 2022 404,040
June 2022 398,070
September 2022 394,742
December 2022 396,350
March 2023 396,775

Census August 2021 August 2016
65-69 years 1,298,460 1,188,999
70-74 years 1,160,768 887,715
75-79 years 821,920 652,661
80-84 years 554,598 460,550
85 years & over 542,342 486,845
total 4,378,088 3,676,770

total age
pensioners 2,574,643 2,556,410
Sept 2021 Sept 2016
58.8% 69.5%
so of the 701,318 extra only a net 18,233 (2.6%) have taken up age pension

and this is whats coming along!
FYI 60-64 years 1,468,097 1,299,400
u

 

[QF WP]

Sorry for the necropost, but I stumbled on this thread late.
there is a terrible entitlement/generational theft vibe to that story.
a massive windfall, more cash in the bank than most Australians would ever see, but I want the government to continue giving me money, even though I have the means to self-fund

Had they taken advice, a qualified financial planner could have discussed all of these issues with the parents (and children) and placed them in a better position (Centrelink and income wise) as there are a number of strategies that I see could have benefited them. But people don't know what they don't know and do it themselves. It's a pity it had to come to that (situation)...but yes, she now has their combined super plus the balance of funds and can still qualify for the Commonwealth Seniors Health Card (just no income from the government).

 

[cove]

I noticed Australian annuities have higher interest rates now following the ratcheting up by the Reserve Bank.

 

[Quickstatus]

@cove, the usually noisy self funded retirees activists have been very quiet.

 

[cove]

Superannuation is meant for assisting retirement but we have many who need it to pay off a mortgage, get a 4WD with a big caravan for the next part of their non working life.
Meanwhile the Federal Government wants us to pay a lot more towards our aged care if we can.

 

[MARTINE]

Waiting to see how the defined benefits go up on July 1st

3.3% I read

 

[MARTINE]

Had they taken advice, a qualified financial planner could have discussed all of these issues with the parents (and children) and placed them in a better position (Centrelink and income wise) as there are a number of strategies that I see could have benefited them. But people don't know what they don't know and do it themselves. It's a pity it had to come to that (situation)...but yes, she now has their combined super plus the balance of funds and can still qualify for the Commonwealth Seniors Health Card (just no income from the government).

Unfortunately financial literacy is quite low.
Is it part of school curriculum?
I could see the issue as soon as that question started in the newspaper article. If on an age pension the information provided to recipients is plentiful and free (in person and on the website). If too complex the children could have assisted and helped them seek advice. They could also do the sums - buy more expensive property (minimal surplus cash) and keep pension or lose pension but earn more from using the cash from the investments… however, financial literacy

I think its the inheritance ‘sunk cost’ thats driving the concerned offspring here

 

[Pushka]

Sorry for the necropost, but I stumbled on this thread late.
there is a terrible entitlement/generational theft vibe to that story.
a massive windfall, more cash in the bank than most Australians would ever see, but I want the government to continue giving me money, even though I have the means to self-fund

I don't have the same concerns when someone sells their family home and has extra assets as result of downsizing. What does press my button is those on a pension who have a large and unexpected windfall - eg lottery win or unexpected inheritance and whose net result is such that they no longer qualify for the pension.