The very first two sentences of a News.com article illustrates the above statement: “The Budget looks set to add $1 billion to the tax bill of the richest superannuation savers by putting an end to the 15 per cent flat tax on contributions. And the Government will challenge the Opposition to reject this means-testing measure which will affect only the top income earners.” (www.news.com.au)
By the end of 2009, that is two and a half years ago, Australia was deemed to have the world's fifth largest Superannuation to the value of $1.2 trillion. That is more money than many of the world's third countries have in total. (news.smh.com.au)
The Australian Taxation Office web site describes Superannuation as: “Super is money set aside over your lifetime to provide for your retirement. For most people, super begins when you start work and your employer starts paying super for you. You can also build your super with your own contributions to take advantage of super's favourable tax treatment.” (www.ato.gov.au)
Three are at least parts to this story
A first is that there are numerous ways in which superannuation can be accrued. Some, due to their high incomes, are able to put into their “super' large amounts of money each fortnight or month. Some, due to their small business arrangements, are able to establish their own 'self funded super'. All of these have rules so as to safe guard the Provence of process (administration laws for superannuation).
A second part
A second part of this story is that “super funds” are at the mercy of the markets. The GFC saw losses in the true value of superannuation funds.
Well-Being Australia chairman Mark Tronson explained that he was personally aware of numerous situations as individuals spoke to him privately. It was nothing secret as the media was all over the story with news items week after week, detailing in robust language, how much the value of super funds had dropped.
Some of his contacts lost up to half the value of their super funds and it's no small measure to claw back those values. It takes many years. Their superannuation savings built up over thirty or more years, then simply dissipated.
Moreover, it is even more frightening now, with Europe on the brink of fiscal meltdown. This Sydney Morning Herald article spells out the dramatic unemployment figures of Spain (23.6 per cent), Greece (21 per cent), Portugal (15 per cent), Ireland (14.7 per cent), and Slovakia (14 per cent). Italy and France are not far behind and there is much fear for the immediate future. Much of Australia's financial destiny is lined up with these European nation's fiscal success. (www.smh.com.au)
A third part
A third part of this story are those Australians who have retired and have made choices as to where to house their superannuation nest egg. Those who have retired in the past ten years or soon to retire, their nest egg will substantial, but no wind-fall.
This means there is enough money to engage in one or two, maybe a third investment, all to the idea of providing enough monies week by week to maintain the lifestyle they have enjoyed during their working life.
This is where financial planners come into the picture. They advice, but the final decision is that of the superannuate.
After dinner current affair television programs have littered the viewing waves with story after story of retires who have taken such measures and found themselves penniless. Some have even lost their homes. Every one of us have seen such programs and “it will never happen to me” syndrome sets in.
The High Court last week deciding the James Hardie case have placed company directors front and centre of fiscal 'personal' responsibility. Commentators claim this will trickle down to every company director (including superannuation investments, although the cost of court action may prove prohibitive). (www.smh.com.au)
Superannuation in reality has proven to be no golden egg for many Australians, and indeed, smarter Aussies too!
Mark Tronson says that the Scriptures are replete with warnings regarding nest eggs and being dependent upon them.
Superannuation is a tricky business.
One way forward is the philosophy of that of spending the kid's inheritance commonly referred to as KISS. They proceed to spend until it lasts or at least, until poor health steps in.
Another way forward is that of investing in eternal values as to where such monies might be utilised for the benefit of evangelism and Kingdom values. Some have purchased a house and then gifted leased it to Missions in order that they can benefit from its use. Some have lent large amounts of money to Churches and Christian agencies for projects and in good time will receive their monies back. In the meantime their superannuation has been phenomenally Kingdom orientated. And many other such similar outcomes and Kingdom practical ideas.
Australian Government “Aid” to the third world some even dare to say is something along such lines although the parallels are by no means exact, and it's why so many Australians press Government for increasing such foreign aid.
Dr Mark Tronson is a Baptist minister (retired) who served as the Australian cricket team chaplain for 17 years (2000 ret) and established Life After Cricket in 2001. He was recognised by the Olympic Ministry Medal in 2009 presented by Carl Lewis Olympian of the Century. He has written 24 books, and enjoys writing. He is married to Delma, with four adult children and grand-children.
Mark Tronson's archive of articles can be viewed at www.pressserviceinternational.org/mark-tronson.html