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Australian retirees to become the richest in the World

To illustrate how superannuation has been absorbed into salary costs, here is what salary packages include:

“Salary packages typically include your base salary as well as additional benefits, incentives or rewards, such as superannuation, annual and sick leave, car allowance or bonuses.”
 
lionking said:
To illustrate how superannuation has been absorbed into salary costs, here is what salary packages include:

“Salary packages typically include your base salary as well as additional benefits, incentives or rewards, such as superannuation, annual and sick leave, car allowance or bonuses.”
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Of course corporations are going to gaslight their employees that a government-mandated program is part of the generous compensation package that the corporation chooses to offer.
 
Sorry dude,

It's just not a tax.

It's an enforced savings scheme.

Every Australian, that works, is required to save money for their retirement.

Employers are required to assist in that process by having a mechanism for diverting a percentage of a person's wage, into a superannuation fund.

Employees can choose what fund they use, and employers are required to nominate a default fund for employees who do not wish to set up their own accounts.

It is even possible to get the same benefits with a 'self-managed' superannuation fund. (Really high earners will often take that approach.)

On top of the mandatory contribution, employees can also choose to make additional contributions.

Over the years, I had many super accounts, and consolidated them into three for the last twenty years of my employment:

(Federal Government, State Government and a Private Fund.)

There is also a common concept called an 'Industry Super Fund' that was set up typically by unions or employer groups (or both in tandem) to provide super accounts for members without having to pay dividends to shareholders. (Private funds can have shareholders who are not members.)

As a person who worked (and contracted and consulted) across many industries, I had accounts in a number of industry funds, but consolidated them into the Private fund.

:)
 
theprestige said:
No. I'm not saying wages are also a tax. Any more than I would say that a government-mandated retirement fund is part of an employee's compensation, if the government administers it and taxes the employer to pay for it. Nobody in their right mind says Social Security payments are part of an employee's wages.
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Is your 401(k) a tax?
 
theprestige said:
Of course corporations are going to gaslight their employees that a government-mandated program is part of the generous compensation package that the corporation chooses to offer.
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You are still wrong. Utterly.

Do you realise that industry sectors and even individual companies can and do offer higher rates of superannuation? Why do they do that? Because it makes them very attractive employers. They certainly don’t view superannuation as a tax, along with the vast majority of Australians.

Police forces and universities are just two which offer higher super.
 
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I'm getting an impression, and correct me if I'm wrong, that Prestige thinks that anything taken out of his salary that he did not want taken out is a "tax". And that anything an employer is forced to pay to employ any one is also a "tax".
 
theprestige said:
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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Methinks you broadened the definition of "tax". Most of us understand tax to be a charged levied by the government and received by the government. Sure, you can call what employers are required to pay into super funds a tax if you like but this is not money going to the government.

There IS a taxable component in this however. Super contributions are taxed at a flat rate of 15%. Since this rate is less than the usual marginal income tax rate, many employees will "salary sacrifice" - have their employer deduct part of their gross wages which is then added to the compulsory super contributions.
 
Canada has something very similar: the Canada Pension Plan [Wikipedia]. All employed people (not sure about self-employment) have a non-trivial amount deducted from their earnings to fund the plan, and the employer is required to contribute the same amount. The Plan is administered independently by CPPI (CPP Investments). According to Wikipedia, "The CPPI's investment strategy is guided by a set of principles that emphasize long-term benefits security, a focus on quality, and a commitment to sustainability and responsible investment practices."

Come retirement age (65 in Canada,) the contributor is entitled to a monthly income of 25% of the average earnings over the past 40 years, with the poorest seven years filtered out. It's not overly generous, and in fact the government strongly recommends workers contribute to an RRSP (Registered Retirement Savings Plan) as well. CPP payments are indexed to inflation, but they're taxable.

In addition to CPP benefits, starting at age 65 every Canadian is entitled to Old Age Security (OAS) Benefit, which as of 2025 is $C 727.64 per month up to age 75, and $C 844.00 for 75 and up. These payments are subject to an income test: if the person makes more than $142,000 a year the OAS is not paid.

Further, Canada has something called the Guaranteed Income Supplement (GIS) for low earning Canadians, which can be as high as $C 600/month for people receiving only OAS (with no CPP or RRSP payouts) but is reduced dollar for dollar for amounts exceeding the GIS benefits. For me, when I retire next year I'll be earning sufficient income to not for eligible of GIS.

In theory one can survive on only OAS and GIS benefits, but they'd have to be extremely frugal and not renting. In many places in Canada rents exceed $1,000/month, which would leave only $300/month for everything else.
 
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psionl0 said:
Methinks you broadened the definition of "tax". Most of us understand tax to be a charged levied by the government and received by the government. Sure, you can call what employers are required to pay into super funds a tax if you like but this is not money going to the government.

There IS a taxable component in this however. Super contributions are taxed at a flat rate of 15%. Since this rate is less than the usual marginal income tax rate, many employees will "salary sacrifice" - have their employer deduct part of their gross wages which is then added to the compulsory super contributions.
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Indeed, as you point out, super when managed properly, can and does save tax.
 
Blue Mountain said:
Canada has something very similar: the Canada Pension Plan [Wikipedia]. All employed people (not sure about self-employment) have a non-trivial amount deducted from their earnings to fund the plan, and the employer is required to contribute the same amount. The Plan is administered independently by CPPI (CPP Investments). According to Wikipedia, "The CPPI's investment strategy is guided by a set of principles that emphasize long-term benefits security, a focus on quality, and a commitment to sustainability and responsible investment practices."

Come retirement age (65 in Canada,) the contributor is entitled to a monthly income of 25% of the average earnings over the past 40 years, with the poorest seven years filtered out. It's not overly generous, and in fact the government strongly recommends workers contribute to an RRSP (Registered Retirement Savings Plan) as well. CPP payments are indexed to inflation, but they're taxable.

In addition to CPP benefits, starting at age 65 every Canadian is entitled to Old Age Security (OAS) Benefit, which as of 2025 is $C 727.64 per month up to age 75, and $C 844.00 for 75 and up. These payments are subject to an income test: if the person makes more than $142,000 a year the OAS is not paid.

Further, Canada has something called the Guaranteed Income Supplement (GIS) for low earning Canadians, which can be as high as $C 600/month for people receiving only OAS (with no CPP or RRSP payouts) but is reduced dollar for dollar for amounts exceeding the GIS benefits. For me, when I retire next year I'll be earning sufficient income to not for eligible of GIS.

In theory one can survive on only OAS and GIS benefits, but they'd have to be extremely frugal and not renting. In many places in Canada rents exceed $1,000/month, which would leave only $300/month for everything else.
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This system is better than nothing, but I think Australia’s system is superior. As I said earlier younger people who accumulate superannuation their whole working lives will face no problems at all, with balances in the seven figures when they retire. They can retire at 55 and draw down their super from that date. They will not be able to draw government pensions, but they shouldn’t need to. I think all my children plan to retire at 55, but may reconsider.

I do not have a superannuation balance like that as the system only came into being when I’d been working for close to 20 years. But I’ve managed to be in the “sweet spot” that not a lot of Australians know about.

I can draw down my superannuation payments fortnightly (you can choose to take out as much as you want, whenever you want) and also draw down the full government aged pension, which for a couple is over $A45k. This is how we can generate more income, all tax free, than when I was working full-time.

I’m not saying things are perfect. If you retire with a mortgage it would be tough. But it’s great to have absolutely no financial problems at this time of life. In fact the Bank of Mum and Dad (one of the biggest lenders in Australia, seriously) has helped three children buy houses.
 
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novaphile said:
Sorry dude,

It's just not a tax.

It's an enforced savings scheme.

Every Australian, that works, is required to save money for their retirement.

Employers are required to assist in that process by having a mechanism for diverting a percentage of a person's wage, into a superannuation fund.

Employees can choose what fund they use, and employers are required to nominate a default fund for employees who do not wish to set up their own accounts.

It is even possible to get the same benefits with a 'self-managed' superannuation fund. (Really high earners will often take that approach.)

On top of the mandatory contribution, employees can also choose to make additional contributions.

Over the years, I had many super accounts, and consolidated them into three for the last twenty years of my employment:

(Federal Government, State Government and a Private Fund.)

There is also a common concept called an 'Industry Super Fund' that was set up typically by unions or employer groups (or both in tandem) to provide super accounts for members without having to pay dividends to shareholders. (Private funds can have shareholders who are not members.)

As a person who worked (and contracted and consulted) across many industries, I had accounts in a number of industry funds, but consolidated them into the Private fund.

:)
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You lost me at "enforced savings scheme".
 
lionking said:
This system is better than nothing, but I think Australia’s system is superior. As I said earlier younger people who accumulate superannuation their whole working lives will face no problems at all, with balances in the seven figures when they retire. They can retire at 55 and draw down their super from that date. They will not be able to draw government pensions, but they shouldn’t need to. I think all my children plan to retire at 55, but may reconsider.
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That sounds excellent! With people retiring at 55 it will open up opportunities for people entering the job market.

What does Australia have for people who have never worked? I'll add this is becoming quite rare as women who used to spend much of their lives as housewives and homemakers are in the work force these days. For example, among my handful of married siblings and cousins, I can't think of a single couple where only one of them works while the other stays at home looking after the house and kids.
 
Blue Mountain said:
That sounds excellent! With people retiring at 55 it will open up opportunities for people entering the job market.

What does Australia have for people who have never worked? I'll add this is becoming quite rare as women who used to spend much of their lives as housewives and homemakers are in the work force these days. For example, among my handful of married siblings and cousins, I can't think of a single couple where only one of them works while the other stays at home looking after the house and kids.
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I was fortunate enough to earn enough for my wife to be a full-time mum to our seven children. As you say, this is rare now. But childcare is heavily subsidised now and two income families is the norm. One of my children is able to employ an au pair to help with the children, but she is on a ridiculous high income which she deserves.

But as I also said earlier, things are not perfect. We have very low unemployment, but like everywhere else people fall through the cracks. Homeless, chronically unemployed and other disadvantaged people do it tough. But we have decent (but probably not sufficient) safety nets.

Back to the OP, I can see why our superannuation system, even though wildly successful , is not being replicated. Back in the 1980s people trusted politicians, and politicians generally deserved that trust. If we didn’t have that system and some party tried to introduce it, it would not happen. People now don’t trust politicians.

Oh well, at least we and future generations will retire comfortably with this system which will never be dismantled. Because it’s so good.
 
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