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Australian retirees to become the richest in the World

lionking

In the Peanut Gallery
lionking
Joined
Jan 23, 2007
Messages
57,992
Location
Melbourne
www.theage.com.au

Australian retirees tipped to join world’s wealthiest

Our collective nest egg will become the second richest in the world, only behind that of the United States – despite having the 55th-highest population.
www.theage.com.au www.theage.com.au

In fact Australian retirement funds, rather than becoming cautious and defensive, are predicted to invest over $1trillion in the US in the next few years.

Now Australians know that this is all down to former PM Keating’s introduction of employer funded superannuation. As this article points out, Australia will become the only developed country which will not be increasing funding for pensions, as in future most will not need government to fund their retirement. Retirement income will eventually all be funded by private sector superannuation, not taxes.

What I’m amazed at is why other nations in general have not followed our lead. It seems a no brainer to me. Yes, businesses did whinge a bit at the start, but the smarter ones saw the superannuation funds as a massive investment opportunity which helps everyone.

So my wife and I are really enjoying retirement years, and it’s even better to know that our children and grandchildren will be even better off.
 
Ditto, really. My retirement benefit pays me fortnightly at the same rate as my income when I was working. And it will do so until I die. Which is a very comfortable life for us, including overseas travel. And my heirs will inherit a pretty hefty remainder when I go. We own our property outright, so no outstanding debts, pretty much. A dream getting further away for the USA.
 
theprestige said:
It sounds reasonable enough.

It also sounds like a tax. Employers are required by law to pay into a social safety net scheme.
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Superannuation is decreed by law for all Australian employees. It's a before-tax deduction, which is matched by employer contributions. Actually, it's a bit more complex than that. But call it a tax if you like.

What is super | Australian Taxation Office

If you're new to Australia's superannuation system for retirement saving, find out how it works and how to benefit.
www.ato.gov.au www.ato.gov.au

I suspect from your tone that you might think "any tax = automatically bad". Perhaps in this case...it isn't? I grant you, only two Aussies out of 25 million responding here. But they have a similar story even though we have almost opposite political views and worked in very different jobs.
 
theprestige said:
It sounds reasonable enough.

It also sounds like a tax. Employers are required by law to pay into a social safety net scheme.
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Yes. Fantastic, isn’t it? I’m actually bringing in more than I worked because the payments now are tax free.
 
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Norman Alexander said:
Superannuation is decreed by law for all Australian employees. It's a before-tax deduction, which is matched by employer contributions. Actually, it's a bit more complex than that. But call it a tax if you like.

What is super | Australian Taxation Office

If you're new to Australia's superannuation system for retirement saving, find out how it works and how to benefit.
www.ato.gov.au www.ato.gov.au

I suspect from your tone that you might think "any tax = automatically bad". Perhaps in this case...it isn't? I grant you, only two Aussies out of 25 million responding here. But they have a similar story even though we have almost opposite political views and worked in very different jobs.
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I have no problem with taxes. This particular arrangement seems to be working out well for everyone. I'm glad.

But I do think lionking is lying to himself if he thinks government requiring private businesses to pay into a retirement scheme isn't a tax. There's a fig leaf of indirection there, but it isn't really hiding anything. I don't understand the pretense.
 
lionking said:
Yes. Fantastic, isn’t it? I’m actually bringing in more than I worked because the payments now are tax free.
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Your payments are now tax free (assuming the government isn't requiring you to pay). Your employer's government-mandated payments are effectively a tax on your employer.

I don't understand your pretense that this scheme has succeeded without taxation.
 
theprestige said:
Your payments are now tax free (assuming the government isn't requiring you to pay). Your employer's government-mandated payments are effectively a tax on your employer.

I don't understand your pretense that this scheme has succeeded without taxation.
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Clearly.
 
I find it very interesting that Australia has defused the pension demographic timebomb facing nearly every country and some are still saying “but tax, therefore bad”.

Maybe critics would like to explain how Australia has remained deficit free for decades and has record low unemployment rates, while growing its way to the 13th biggest economy in the world?
 
lionking said:
Clearly.
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I mean, it's obviously taxation.

Instead of funding a government-mandated retirement fund by making employers give them money to put in the fund...

... Your government is funding a government-mandated retirement fund by making employers put money into the fund.

Why pretend this isn't taxation?
 
The level of superannuation saved for women is much lower than the level of superannuation for men. The article doesn't mention that.
 
Sounds like an involuntary 401-K. I presume the employees must contribute as well as the employers?
 
Brainster said:
Sounds like an involuntary 401-K. I presume the employees must contribute as well as the employers?
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No, it's not compulsory, but employees can contribute if they want to, and can get tax breaks for some contributions.

Note, some might argue that the employee "contributes" because if superannuation wasn't compulsory for employers, the employees would get higher wages, but that's debatable.
 
theprestige said:
I mean, it's obviously taxation.

Instead of funding a government-mandated retirement fund by making employers give them money to put in the fund...

... Your government is funding a government-mandated retirement fund by making employers put money into the fund.

Why pretend this isn't taxation?
Click to expand...
Taxes go to the government. Australian superannuation does not. Doesn't even come close to the government. All of my super, for example, went into a self-managed fund run by Colonial First State, an investment management firm. Not the government. There are plenty of other investment firms specialising in superannuation. It's a big industry!

CFS - Australian Super & Investment Fund

We've helped over 3 million Australians achieve financial freedom in retirement. Unleash your second half.
www.cfs.com.au www.cfs.com.au
 
Orphia Nay said:
No, it's not compulsory, but employees can contribute if they want to, and can get tax breaks for some contributions.

Note, some might argue that the employee "contributes" because if superannuation wasn't compulsory for employers, the employees would get higher wages, but that's debatable.
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I don’t think it is debatable, but it really doesn’t matter. Super is not a tax, it has become a cost of doing business. And super is invested in a vast range of Australian businesses, which both earns excellent interest (super averages 8% per annum returns over decades) and boosts the economy.
 
Norman Alexander said:
Taxes go to the government. Australian superannuation does not. Doesn't even come close to the government. All of my super, for example, went into a self-managed fund run by Colonial First State, an investment management firm. Not the government. There are plenty of other investment firms specialising in superannuation. It's a big industry!

CFS - Australian Super & Investment Fund

We've helped over 3 million Australians achieve financial freedom in retirement. Unleash your second half.
www.cfs.com.au www.cfs.com.au
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Yes, it’s an hilarious misunderstanding of super.
 
lionking said:
I don’t think it is debatable, but it really doesn’t matter. Super is not a tax, it has become a cost of doing business. And super is invested in a vast range of Australian businesses, which both earns excellent interest (super averages 8% per annum returns over decades) and boosts the economy.
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Interestingly, some super investments are in overseas financial vehicles, such as foreign shares investments. I'm in the process right now of ensuring none of mine is tied to US stocks. I don't want to be betting my future on failing investments.
 
Norman Alexander said:
Interestingly, some super investments are in overseas financial vehicles, such as foreign shares investments. I'm in the process right now of ensuring none of mine is tied to US stocks. I don't want to be betting my future on failing investments.
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I’m leaving it in the hands of my fund HESTA. They have for more expertise than me, and I believe their investments are reputable.
 
lionking said:
I don’t think it is debatable, but it really doesn’t matter. Super is not a tax, it has become a cost of doing business. And super is invested in a vast range of Australian businesses, which both earns excellent interest (super averages 8% per annum returns over decades) and boosts the economy.
Click to expand...
It's a cost of doing business mandated by the government, to satisfy the government's desire to fund a retirement scheme. Functionally, it's a tax.
 
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