Category: Letters To Save Our Super

Turned 60 on 2 June, and entered Transition To Retirement (“TTR”) – working full-time to increase super balance. My super is “only” $500,000″ but due to two divorces, I rent. I need to try to accumulate enough to buy something to live in, or face life-time renting. I am a fit, active, 60 year old.  Like my parents and my uncle and aunts, I may live until I’m 90-95 years or older. I do not want to be reliant on housing from Fed Govt and taxpayers. Taxing TTR is bad enough – virtually negating any benefit or dramatically reducing it. Furthermore, if back-dated, means that people making that decision like me – will be disadvantaged when simply complying with the legal rules. Those rules were put in place for good reason. They have already assisted many thousands of Australians to be better prepared for the road ahead without salary or wages. Well done Save Our Super. Thank you for the initiative and representation of an otherwise silent mob.

Neil Chapman

I am a Self Funded retiree and am outraged by the proposed superannuation changes. I am neither rich or poor, but have arranged my retirement finances around the rules in place. Worst of all are the lies the government told us in that there would be no change in taxation arrangements to Super. I would be happy to pay some tax in difficult times but the $1.6M cap is far too low. I believe in the interests of fairness the existing rules should be grandfathered.

James Rowe

Bowral, NSW

I am happy to participate in any productive activities which may contribute to better ongoing stability for superannuation. As brand-new retirees, my wife and I are very annoyed and feel seriously disenfranchised by the recently proposed superannuation changes. Hence I have willingly joined the “Save Our Super” efforts, including the email petition. I sincerely hope that a massive groundswell of currently angry “grey power” people, and our future generations of “grey power” people, will bring about a realisation among politicians of all persuasions that our own futures are being savagely messed-with for political expediency. It must stop!

Daryl Toepfer

Castle Hill, NSW

I’m sick of Governments changing super. We save and try to salary sacrifice. We have transitioned to retirement and now they want to tax that. If they keep making changes, people will stop trying to get ahead and go back to relying on a pension. We are not high income earners. Between us we earn under 120,000 per year – but the superannuation changes will still affect us. It’s not fair.

Christine McNab

Concerns regarding changes to Superannuation.

1. I am concerned that any trust in saving to fund one’s retirement has been eroded by Mr Morrison’s budget decisions. When he spoke at the recent self managed superannuation conference held in Adelaide he said, “Our opponent’s stated policy is to tax superannuation earnings in the retirement phase.  I fear that the approach of taxing in the retirement phase penalizes Australians who have put money into superannuation under the current rules – under the deal that they thought  was there.”  He went on to say, “ It may not be technical retrospectivity, the tax technicians and the superannuation technicians may say differently.  It is effective retrospectively.  But when you just look at it, that is the great risk.”

There were also at least 10 other occasions when Mr Morrison made tax  free superannuation promises between May and June 2015.  And yet, these promises were broken when he announced the proposed changes in the budget.  People need to be able to trust the superannuation system.  Life  time decisions are made at the time of the laws available.  To change those laws retrospectively  is unreasonable and unfair.  All they do is undermine trust in the government.

Past increases in superannuation used to be grandfathered and reflected the commitments that government encouraged workers to lock their savings away for many years to fund their retirement.  So basically the Turnbull-Morison government has informed those near retirement or already retired ,  tough luck, we’ve just cut the retirement living standards you saved for, so get lost.  And save for it we did,  people of my generation.

Basically the message here is that if someone has carefully responded to all the requirements to fund themselves in retirement under the laws current at the time they did so, they can NEVER AGAIN TRUST A GOVERNMENT NOT TO CHANGE THE RULES TO DISADVANTAGE RETIREMENT LIVING STANDARDS AFTER THEY HAVE RETIRED.

2. “There is no doubt that the proposed pension transfer balance cap of $1.6m is retrospective, as the Government has said that people with pension phase balances over $1.6m will have to reduce these by 1 July 2017, either by moving the money back into an accumulation account, or by taking it out of the super system. It is this part that makes it retrospective. (Switzer Daily, Paul Rickard, 12.05.2016).

3. The Superannuation Fact Sheet provided by the government states that “A balance of $1.6 million could purchase an annual income stream of around four times the level of the single age pension.”

This amount has been questioned by the former treasurer of the Coalition, Peter Costello in his address to Women in Banking and Finance at a meeting in Sydney on May 17. It was reported in the Australian May 19: “Past returns are no guide to future performance.  It is the most common piece of investment advice but one the government has appeared to ignore in its proposal to cap tax-free retirement balances to $1.6 million.  Scott Morrison has claimed such a sum would provide a retirement income of about four times the aged pension, or about $88,000 a year.  But the former treasurer has pointed out rightly 5.5 per cent returns are increasingly unrealistic, for the medium term at least.  The typical diversified superannuation fund actually lost 1.6 percent in the year according to Chant West.”

Even when I spoke with Jane Prentice the member for my electorate of Ryan there was confusion about being able to top up the $1.6 million if it was reduced through something like the GFC or other aspects affecting the investment.  The answer is “NO”.  Basically this means that the Coalition Government is again reducing the standard of living for those in retirement.  I find it quite unbelievable that such ill considered decisions can be inflicted on those who throughout their life times have in all probability paid the most income tax and contributed towards the country that Australia is today.

I would refer you to an article by Rowan Dean in the Courier Mail 9/6/2016 titled “Changes to super risk election loss.”  I will provide you with one quote from this article, “ Peter Costello recently pointed out that super relies above all else on consistency.”  People spend their lifetimes working, paying taxes, and supporting others – but every day they are planning their own future.  Now the Coalition has thrown out the rule book and put a Bolshevik- style limit on how much you can save and – disgracefully- backdated it a decade.  Such betrayal from a so called “Liberal” government is beyond belief.”

4. The number of people affected by the changes to superannuation is more than 1% as outlined in the superannuation reforms paper. There are about 110,000 people affected by the $1.6m cap, 550,000 individuals affected by the new lifetime non-concessional cap, about 640,000 individuals affected by the transition to retirement changes,.  In summary this is about 9% of fund members affected., The Australian, May 14-15.

5. If Mr Costello had left the old reasonable limit benefit in place, its present value would be $2.5m. But the group think came to the conclusion that $1.6m is effectively the same as Labour’s  policy, which tells us that the changes were all about politics and not good policy.  Judith Sloan puts the whole thing down to a group think stuff-up.  Fearing that the government was vulnerable to accusations of being unfair the group decided it could outflank Labour on superannuation and political accolades would surely follow.  Sloan states that “the end result is an over-engineered dog’s breakfast, much of which will never be implemented, that BETRAYS A CORE CONSTITUENCY OF ITS VOTER BASE..”  SHE ALSO SAYS THAT YOUNGER PEOPLE IN THEIR 40S AND 50S WILL NEVER BE ABLE TO FUND THEMSELVES IN RETIREMENT due to the changes.

6. The following headlines in The Australian May 21-22 cannot be ignored:

Superannuation measures are a white hot issue in conservative ranks, Dennis Shanahan, p21.

Relegate Libs to save super, Dennis Shanahan, p9.

Super Squeeze to hit an entire generation hard, Andrew White, p27, 33.

Surely there must be some recognition that changes are needed to make the overall policy acceptable and incur trust in this government.  These changes should include grandfathering appropriate aspects for those who made decisions to self fund their retirement under the rules as they existed then.  Consideration should also be given to the potential millions of people in the future who can only contribute a maximum of $25,000 pa as a Concessional contribution combined with the $500,000 lifetime Non Concessional cap.  I Ieave you to ascertain what this means for those attempting to reach the $1.6m cap.

The recent result of the Brexit campaign has thrown the financial markets into turmoil.  This will have an enormous effect on superannuation funds.  It is the uncertainty of current times and decisions upon which I, as a self funded retiree have no influence that saddens me and I am dependent upon the decision makers in government to demonstrate their concern for my wellbeing.

Maureen Burke

Brisbane, Qld

Dear Jane,

Thank you for meeting with me last Thursday.  I thought I would just put the concerns I discussed with you in writing and these are outlined below:

1. I am concerned that any trust in saving to fund one’s retirement has been eroded by Mr Morrison’s budget decisions. When he spoke at the recent self managed superannuation conference held in Adelaide he said, “Our opponent’s stated policy is to tax superannuation earnings in the retirement phase.  I fear that the approach of taxing in the retirement phase penalizes Australians who have put money into superannuation under the current rules – under the deal they thought that was there.”  He went on to say, “ It may not be technical retrospectivity, the tax technicians and the superannuation technicians may say differently.  It is effective retrospectively.  But when you just look at it, that is the great risk.”

Past increases in superannuation used to be grandfathered and reflected the commitments that government encouraged workers to lock their savings away for many years to fund their retirement.  So basically the Turnbull-Morison government has informed those near retirement or already retired ,  tough luck, we’ve just cut the retirement living standards you saved for, so get lost.

Basically the message here is that if someone has carefully responded to all the requirements to fund themselves in retirement under the laws current at the time they did so, they can NEVER AGAIN TRUST A GOVERNMENT NOT TO CHANGE THE RULES TO DISADVANTAGE RETIREMENT LIVING STANDARDS AFTER THEY HAVE RETIRED.

2. “There is no doubt that the proposed pension transfer balance cap of $1.6m is retrospective, as the Governemnt has said that people with pension phase balances over $1.6m will have to reduce these by 1 July 2017, either by moving the money back into an accumulation account, or by taking it out of the super system. It is this part that makes it retrospective. (Switzer Daily, Paul Rickard, 12.05.2016).

3. The Superannuation Fact Sheet you provided me with states that “A balance of $1.6 million could purchase an annual income stream of around four times the level of the single age pension.”

This amount has been questioned by the former treasurer of the Coalition, Peter Costello in his address to Women in Banking and Finance at a meeting in Sydney on May 17. It was reported in the Australian May 19: “Past returns are no guide to future performance.  It is the most common piece of investment advice but one the government has appeared to ignore in its proposal to cap tax-free retirement balances to $1.6 million.  Scott Morrison has claimed such a sum would provide a retirement income of about four times the aged pension, or about $88,000 a year.  But the former treasurer has pointed out this week, rightly 5.5 per cent returns are increasingly unrealistic, for the medium term at least.  The typical diversified superannuation fund actually lost 1.6 percent in the year according to Chant West.”

Even when I spoke with you there was confusion about being able to top up the $1.6 million if it was reduced through something like the GFC or other aspects affecting the investment.  The answer is “NO”.  Basically this means that the Coalition Government is again reducing the standard of living for those in retirement.  I find it quite unbelievable that such ill considered decisions can be inflicted on those who throughout their life times have in all probability paid the most income tax and contributed towards the country that Australia is today.

I would refer you to an article by Rowan Dean in the Courier Mail 9/6/2016 titled “Changes to super risk election loss.”  I will provide you with one quote from this article, “ Peter Costello recently pointed out that super relies above all else on consistency.”  People spend their lifetimes working, paying taxes, and supporting others – but every day they are planning their own future.  Now the Coalition has thrown out the rule book and put a Bolshevik- style limit on how much you can save and – disgracefully- backdated it a decade.  Such betrayal from a so called “Liberal” government is beyond belief.”

4. The number of people affected by the changes to superannuation is more than 1% as outlined in the superannuation reforms paper.  There are about 110,000 people affected by the $1.6m cap, 550,000 individuals affected by the new lifetime non-concessional cap, about 640,000 individuals affected by the transition to retirement changes,.  In summary this is about 9% of fund members affected., The Australian, May 14-15.

5. If Mr Costello had left the old reasonable limit benefit in place, its present value would be $2.5m. But the group think came to the conclusion that $1.6m is effectively the same as Labour’s  policy, which tells us that the changes were all about politics and not good policy.  Judith Sloan puts the whole thing down to a group think stuff-up.  Fearing that the government was vulnerable to accusations of being unfair the group decided it could outflank Labour on superannuation and political accolades would surely follow.  Sloan states that “the end result is an over-engineered dog’s breakfast, much of which will never be implemented, that BETRAYS A CORE CONSTITUENCY OF ITS VOTER BASE..”  SHE ALSO SAYS THAT YOUNGER PEOPLE IN THEIR 40S AND 50S WILL NEVER BE ABLE TO FUND THEMSELVES IN RETIREMENT due to the changes.

6. The following headlines in The Australian May 21-22 cannot be ignored:

Superannuation measures are a white hot issue in conservative ranks, Dennis Shanahan, p21.

Relegate Libs to save super, Dennis Shanahan, p9.

Super Squeeze to hit an entire generation hard, Andrew White, p27, 33.

Surely there must be some recognition that changes are needed to make the overall policy acceptable and incur trust in this government.  These changes should include grandfathering appropriate aspects for those who made decisions to self fund their retirement under the rules as they existed then.  Consideration should also be given to the potential millions of people in the future who can only contribute a maximum of $25,000 pa as a Concessional contribution combined with the $500,000 lifetime Non Concessional cap.  I Ieave you to ascertain what this means for those attempting to reach the $1.6m cap.

Every Liberal voter had such high expectations of Malcolm Turnbull when he took over the leadership of the Coalition. I suggest you read the article in The SMH 16/5/2016 entitled, “Shorten turns the tables on hapless Turnbull.”  I cannot help but notice the arrogance displayed by both Malcolm Turnbull and Scott Morrison when they speak or write about the proposed changes to superannuation.  This arrogance reminds me of that displayed by the former Premier of Queensland, Campbell Newman and we all know what happened to him!

Kind regards

Maureen Burke

Brisbane, Qld

26 June 2016

I have been an ASIC-registered Financial Adviser for more than three decades. Over that time, I have provided my clients with retirement-planning advice. I have promoted the Government’s (both Liberal and Labor) carrot and stick message of (1), the increased long-term vulnerability of the aged-pension and, (2), tax concessions specifically structured to encourage self-funding superannuation retirement savings.

ASIC requires me to give my clients a Statement of Advice (“SoA”). It sets out the Government’s superannuation tax incentives. Those tax incentives underpin my SoA’s recommendations. They are crucial to the client’s decision. I am invariably asked “What happens if the Government changes things?”. UntiI now, I have always answered: “In my long-term experience, Governments have always ‘grandfathered-in’ protection for existing arrangements.”  

But Treasurer Scott Morrison, in his May 2016 Budget, changed all that.

Last year, before that Budget, he said to the Australian people:

“The Government has made it crystal clear that we have no interest in increasing taxes on superannuation either now or in the future.

… unlike Labor, we are not coming after people’s superannuation…”

Not only did the Government not do what the Treasurer promised, they did precisely what the Treasurer promised that the Government would not do.

The Government came after people’s superannuation and announced proposed increased taxes on superannuation.

Furthermore, the Treasurer added insult to injury. He announced those increased taxes without also announcing that Australians who had acted in good faith and saved for their retirement under the then existing rules, would have their superannuation savings protected by grandfathering.

What am I supposed to tell my clients now, when they ask me, as they will, “What happens if the Government changes things?”

Am I now to say, “Well, I remember the Liberal Government’s May 2016 Budget. I wouldn’t put my savings into superannuation because you can’t trust the Government not to change the rules, and not protect your savings by grandfathering the existing rules”.

Jim Brownlee,

Authorised Financial Adviser Representative.

Berwick, Victoria

Save Our Super Disclosure:

The author of the above letter, Jim Brownlee, is a long-standing and close friend of Jack Hammond’s – the founder of Save Our Super. From 1965 to 1974 they were partners/shareholders and directors of Brownlee Hammond & Associates Pty Ltd, Insurance Brokers. Since then, Jack Hammond has no financial or any other interest in any business associated with Jim Brownlee. They remain good friends. Jim Brownlee requested Jack Hammond to review and publish the above letter. The final form of the letter was authorised by Jim Brownlee.