Save Our Super

Implications of the Retirement Income Review: Public advocacy of private profligacy?

17 March 2021

Terrence O’Brien

The recent Retirement Income Review (RIR) implies policies that would reduce after-tax returns to super saving, encourage faster spending of life savings and of equity in the family home, and minimise bequests. Its approach would incline each generation towards consuming more fully its own lifetime savings.

This paper demonstrates the RIR relies on contested Treasury ‘tax expenditure’ estimates that use a hypothetical benchmark that is biased against all saving, but particularly against long-term saving.

Remarks to the COTA Australia National Policy Forum on Retirement Income

Senator The Hon Jane Hume

The measure of society is how it treats its most vulnerable members and our retirement income system is one of the greatest indicators of the values our society holds dear. It is a system that bolsters Australians’ financial security, peace of mind, quality of life and wellbeing in their retirement.

As the system matures, Australians are retiring with more retirement savings than ever before, which has enabled us to have one of the most sustainable, viable and fair retirement income systems in the world.

Address to the COTA Australia National Policy Forum on Retirement Income

The Hon Josh Frydenberg MP

Thank you Ian and the Council on the Aging (COTA) for hosting today’s national policy forum on retirement income.

I would like to acknowledge the constructive role that COTA has played – both prior to the Review being commissioned and since its completion. I especially want to recognise that COTA approaches these issues in a calm and considered manner – not seeking to sensationalise but rather seeking a balanced discussion based on the facts.

Do retirees hoard their superannuation?

Jim Bonham saveoursuper.org.au

On 22 January 2021, the Australian Financial Review featured a front-page article by John Kehoe and Michael Roddan headed “‘Ever more’ super gets hoarded: Hume”. ¹

In the same issue, Jane Hume (Minister for Superannuation, Financial Services, and the Digital Economy) provided an op-ed “Safety nets let frugal retirees spend savings without a super rise”. ²

On 23 January 2021, Kehoe followed up with an article entitled “Push for seniors to dig deep into super nest egg” in which he wrote:

“Superannuation Minister Jane Hume kicked off a national debate about retirement incomes this week …

“She said people needed to be more confident to spend – not hoard – retirement savings to improve living standards throughout their lives …

“The government’s retirement income review led by former Treasury official Mike Callaghan identified that many retirees died with most of their wealth intact and did not run down their super or tap equity in their home, so they might be saving too much”. ³

It is clearly an important national question. Wealth includes the home and other assets as well as super, but because the regulatory, financial, market, liquidity, and social issues in relation to housing differ so much from those applying to super, this article focusses only on super.

Is it true that retirees hoard their super?

The Tax Institute Submission | Proportional Indexation of the Personal Transfer Balance Cap

Dear Assistant Minister
Proportional Indexation of the Personal Transfer Balance Cap

The Tax Institute requests the Government to consider the reforms outlined below in relation to Division 294 of the Income Tax Assessment Act 1997 (ITAA 1997) – that is, the transfer balance cap (TBC) provisions.
Division 294 was included as a part of the 2016-17 Federal Budget Superannuation Reforms and introduced a cap on the amount of superannuation benefits an individual could transfer into pension (tax-free retirement) phase. The General TBC was initially set at $1.6 million1 upon commencement from 1 July 2017. The law includes the indexation, in increments of $100,0002, of the TBC in line with movements in the CPI.

The early release of superannuation: the financial consequences

16 August 2020

Jim Bonham https://SaveOurSuper.org.au

Early release of superannuation

Limited early release of superannuation has been a part of the government’s support to people suffering financial stress caused by the COVID-19 pandemic. This has been welcomed by some but strongly opposed by others because it is seen as a corruption of compulsory saving and …

Consequences of increasing the superannuation guarantee rate

Between now and 2025 the compulsory “superannuation guarantee” (SG) contribution to superannuation is legislated to increase in steps from 9.5% of gross income to 12%.
This move is being opposed by some people, particularly the Grattan Institute (see https://grattan.edu.au/report/money-in-retirement, amplified by op-eds in the press.
Unfortunately, formal “think tank” and academic reports tend to be inaccessible to the average reader. Calculations may be opaque; and journalists often manage to make the impending increase look quite complicated and confusing.
It does not have to be so. This short note explores the immediate consequences of the legislated increase in the SG rate from 9.5% to 12% and introduces an alternative proposal to increase the SG rate to 10%, or even leave it unchanged, and drop the contribution tax entirely.

Save Our Super submission: Consumer Advocacy Body for Superannuation

Click here for the PDF document

13 January 2020

The Manager Retirement Income Policy Division Treasury Langton Cres Parkes ACT 2600

Save Our Super submission: Consumer Advocacy Body for Superannuation

Dear Sir/Madam

Save Our Super has recently prepared an extensive Submission to the Retirement Income Review dealing in part with the many ‘consumer’ issues triggered …

Submission by Save Our Super in response to Retirement Income Review Consultation Paper – November 2019

by Terrence O’Brien, Jack Hammond, Jim Bonham and Sean Corbett

saveoursuper.org.au

10 January 2020

Click here for the full PDF document

Summary The Review’s Terms of Reference seek a fact base on how the retirement income system …

Retiree time-bombs

By Jim Bonham and Sean Corbett

www.saveoursuper.org.au

1 Abstract

The complexity of superannuation and the age pension conceals at least 6 time-bombs – slowly evolving automatic changes to the detriment of retirees – caused by inconsistent indexation: Division 293 tax, currently only for high income earners, will become mainstream.Shrinking of the transfer balance cap …

Supporting retirees with extension of the temporary reduction in superannuation minimum drawdown rates

29 May 2021

Media Release

Today the Morrison Government announces an extension of the temporary reduction in superannuation minimum drawdown rates for a further year to 30 June 2022.
As part of the response to the coronavirus pandemic, the Government responded immediately and reduced the superannuation minimum drawdown rates by 50 per cent for the 2019‑20 and 2020‑21 income years, ending on 30 June 2021.

Save Our Super suggestions for Review of Retirement Income System

BY TERRENCE O’BRIEN AND JACK HAMMOND on behalf of themselves and Save Our Super

28 June 2019

When more individuals save for self-funded retirement above Age Pension levels, their savings contribute funds and real resources for reallocation through the financial sector to fund investments. Such an economy will be more dynamic and efficient than one …

7.30 Report interviews Save Our Super on Kelly O’Dwyer – 24 April 2017

Click here to view the ABC’s 7.30 Report interview of Save Our Super’s Jack Hammond QC and John McMurrick on Kelly O’Dwyer.

Click here for the transcript of the interview.

Sunday, July 16, 2017

Grandfathering provisions

Save Our Super believes that major changes to the existing rules of the Australian superannuation system should not be made unless, at the same time, appropriate grandfathering provisions are included in the legislation.

“Grandfathering provisions” are qualifying clauses within legislation which exempt those people already involved in the activity with which the legislation deals.

Tuesday, …

Tony Abbott supports “grandfathering”

On 27 June 2017, Tony Abbott, in a speech to the Institute of Public Affairs, Brisbane, supported grandfathering provisions. He said, amongst other things:

Absent an acute crisis, to get elected with an economic reform programme, it’s probably necessary to guarantee that existing beneficiaries will keep their benefits.

But even with grandfathered changes, a government …

Reserve Bank of Australia and Productivity Commission on grandfathering

There are many examples of Federal Parliament’s use of grandfathering provisions when major changes were made to the superannuation system. For example:

in a September 1996 Research Paper, the Reserve Bank of Australia said:

“Important changes to the tax rules were made in 1983, 1988, 1992, and 1996, which generally reduced the tax …

Grandfathering Provisions Required

The historic use of appropriate grandfathering provisions to protect those who were significantly affected by major superannuation rule changes, justifies their use in the Coalition’s Superannuation ( Excess Transfer Balance Tax) Imposition Act 2016 (C’th) (No 80 of 2016) and Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 ) (C’th) (No 81 of 2016).

However, …

Super changes – why grandfathering the rules must be considered

Jack Hammond, QC, founder of Save Our Super

Terrence O’Brien, B Econ (Hons), M Econ, former Treasury official

Any government must retain the right to change policies as circumstances change over time. Policy change always poses two questions: Is the change an improvement? And is it properly implemented? This article focusses on implementation issues, which …

Save Our Super’s Pillars of Principle

“Trust” and “Certainty” are Save Our Super’s “Pillars of Principle”. They are fundamental. Only with those two pillars of principle in place can a fair and sustainable Australian superannuation system survive and flourish.

Trust

First, a government should not undermine people’s trust in the superannuation system.

Trust is shattered when, for example, a Minister like …

Our Call For Action

Save Our Super calls for all Federal parliamentarians to promote and support superannuation policies and legislation which contain grandfathering provisions that maintain the previous entitlements of those Australians who will be significantly affected by major rule changes to the then existing superannuation provisions.

Tuesday, December 13, 2016

Save Our Super

Save Our Super is an apolitical community-based group which makes the public aware of the implications of the Coalition’s superannuation legislation and Labor’s superannuation policies.

Some of our supporters vote Liberal/National; some vote Labor; others vote for other parties or independents. But we are united in Our Call For Action by the Federal Parliament.

Tuesday, …

Unfair and unreasonable

It is manifestly unfair and unreasonable to individuals who now, or will, rely on their superannuation savings for a retirement income under the then existing rules to make new rules which significantly affects them.

Therefore, appropriate grandfathering provisions need to be put in place to protect all significantly affected Australians.

Thursday, June 28, 2018

Undermines trust

A Government’s right to govern is based upon the bond of trust between the people and their Government. Trust is the currency of Government. When, by a breach of trust, a Government debases that currency, the people lose confidence in their Government.

And so it is when Governments make major rule changes to an existing …

Superannuation – A Long Term Savings Plan Under Threat

Australians’ investment in superannuation is an almost life-long savings plan. It starts from the first superannuation contribution and lasts until the final pension payment.

In 1991, the Superannuation Guarantee levy was imposed. Australian’s participation in superannuation has accelerated from about 30% of employed persons to over 90% today.

Since the 1980s, Australia’s accumulated superannuation savings have risen …

Save Our Super's Articles of Interest

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