During Covid, we were allowed to dip into our super- $10k, should we be allowed to do the same considering inflation?
Inflation - Should We Be Allowed to Dip into Our Super?
GoldStar on 03/07/2022 - 18:46
Last edited 03/07/2022 - 19:21 by 1 other user
Last edited 03/07/2022 - 19:21 by 1 other user
Poll Options
- 93Yes
- 1150No
Comments
Literally!
RBA is raising rates specifically to try and curb consumer demand and cool inflation. Allowing people to dip into super is completely contrary to the intent here.
Lol got him
I was against letting people have their super during covid and I am against it now.
If it were to happen :
- that money must be considered taxable income in that financial year (less the 15% contributions tax already paid).
- that money must be indexed (10% per annum) and form their pension eligibility (assets test) should they apply. No way someone should receive the pension if these withdrawals brings them below a threshold.On top of this the current hardship provisions for early Super release are rather lax and open to interpretation by the fund trustees. For example, I have an acquaintence who is obese, she took the easy way to find and got a stomach band. The weight loss was dramatic as one would expect, she was then very unhappy with the resultant loose skin. She got her doctor and the trustee of her super to agree to a withdrawal of her super on the grounds the skin removal procedure was required for her mental health.
These provisions are there to make sure we do not starve.
I was against letting people have their super during covid and I am against it now
agree
pension threshold is dumb anyway, just encourages people to spend up between 60 and 67, as you actually get a negative return by having too much super.
use it for holiday, or build a gold bar pergola on your house and have it count as part of your ppor. melt it down if the time comes to need it
that money must be indexed (10% per annum) and form their pension eligibility (assets test) should they apply. No way someone should receive the pension if these withdrawals brings them below a threshold.
Agreed!
That’s a dumb af example, there’s a lot of shitty reasons to withdraw super but there’s no point in money to stop you starving if you’re dead.
By the time you get something like a stomach band you’re looking at not being likely to live to see preservation age.
The reason Super was instituted (roughly) is simply because most people do not save $1 towards their retirement - and rely completely on the government to provide a pension.
Giving everyone access to take out chunks out of super every time they feel things a bit tough isn't going to help anyone.
Short term gratification is a consistant human trait unfortunately.
It has a double impact, because the whole bargain made when super was introduced was because it reduces inflation. So allowing people to withdraw due to inflation, must seriously be trolling.
As I know someone who dipped twice during the COVID period for 10k each time in which said person went and lost the entire 20k on sportsbet im going to say No they clearly dont determine what financial 'hardship' is very well
super is for your retirement it is a system designed to take pressure off the struggling pension system it isnt a emergence relief fund to be used because our governments are useless at managing difficult economic times
Username checks out
Yes, it's our money and we should have the right to take it out during this difficult time.
Super is tax-advantaged savings to aid your retirement. It's not a tax contribution to the Commonwealth, but nor is it your personal savings.
If it's under your name, then it's your account
But it is the rest of us that will have to pay for financially illiterate people come retirement.
They can live on the streets
That's not how it'll work though. We'll end up paying for them.
All for that as long as they sign agreements that when it comes to retirement or pension they will have it counted as an asset that has been accruing till retirement regardless if whether they still have it.
You can keep your money till you're dead. Don't tell me how I can or can't use mine
@[Deactivated]: Interesting how it’s not my money, although it is component from our salary. Dodgy govt tactic to offset pension & entitlement triggered only after super is exhausted-
JOKE.@GoldStar: Only option is is an opt out option, but those who take it get no access to the oap, and if you run out of $ then you rot in the street.
If everyone all of a sudden didnt have to do the sg, would be no better off as inflation would swallow it. Then what ?
You don't have a choice. The government tells you how you can use that money. The person you responded to is just telling you how it is.
Take it up with Jim Chalmers.
During the pandemic it was allowed because it would cost a future government, but the one benefiting was the current one. Which is why preservation age won’t go up, elections have been lost over fiddling with super, so that’s the end of it for a generation or two.
No
there is already provision to dip into super if you are in a dire financial state (https://www.ato.gov.au/individuals/super/withdrawing-and-usi…)
inflation of ~7% is not dire financial conditions.
budget harder, sacrifice things you previous could afford, start dealing drugs, sell unused assets like boats/cars/motorbikes, shop at aldi, change your phone plan, eat less meat, stop drinking and smoking, stop gambling, stop buying luxury / non essential items, no more take out, prepare your own lunches, catch public transport, holidays within your own state, etc.
I look forward to a day where the old age pension is a negligible amount of money paid by the government to retirees because our super system remains strong and robust and we can funnel that money into more worthy things like boosting the budget for Medicare and other health related things (hospitals, nurses, paramedics, allied heath care)
Yep, Inflation = people (in general) have more money to spend than goods are available. So giving people more money due to high inflation is adding fuel to the fire.
Things like my minimum wage boosts and actual hardship provisions are better targeted because they don’t give money to people already using their excess to push up prices.
All on black
We voted out the last scheming Scom -bag that was keen for us to p@ss our retirement against the wall.
No. No. No.To be honest, super contributions should be split into two categories, either 50/50 or 66/33…
If the government wants to encourage home ownership, 1 part goes towards retirement, 1 part towards money than can be leveraged for a home (after your first home is paid off, it goes towards retirement). If they were clever about this, they could have a third category for health insurance/health care for when you are no longer working to take the burden off health funding.
You want to curb inflation by [checks notes] … increasing cash flow into the economy?
Yep, super was introduced in a period of high inflation precisely to stop cash flow into the economy, would be a bit silly to allow withdrawing it due to inflation.
I think people should be allowed to dip into their super if it was for profound hardship and ideally an onus to top it back up in when times improve. So many judgemental people here assuming everyone who applies is going straight for the latest gadget or fast food. You could die tomorrow, what’s your super worth to you then? It’s not black and white people. Empathy, assessment of circumstances need to be factored in.
This basically is early access provisions at present. It includes loosing you house, homelessness, terminally ill, medical treatment etc. It's taxed to shit but no clawback.
I think what most people are saying is that it should not be like the Covid access.
https://www.ato.gov.au/individuals/super/withdrawing-and-usi…
I think people should be allowed to dip into their super if it was for profound hardship
You can already do that. Not being able to get the latest iPhone is not profound hardship, as difficult as that may be for some.
It is your money … but still they say NO.
Must wait until very old (age varies as time passes), very dead or very pauper.
But it is your money.
It will be worth it.
Trust them. Would the government lie to you?
Yes, we may not be alive 30 years from now if we can't afford proper food or medical.
just YES
I marvel at the stereotypes bashed around here, such as: every retiree is a ‘millionaire’ and lives in a ‘mansion’. Gotta say all my friends and acquaintances of a similar vintage don’t fit that description. We’ve all worked hard to get our house (note: singular) and have had no say in market values (stupidly) going through the roof.
Besides, these values are only on paper. Our house is now ‘worth’ three times what I paid for it 30 years ago. Big deal. Guess what? If we sell, I’m buying into the same over-inflated, unrealistic market unless we’re willing to move to some backwater to have a ‘profit’.
https://www.ozbargain.com.au/user/8301
Well I suppose you could continue working to pay the up keep on your massive under-utilised house…
Uhhhh. Again, using my sampling of friends and acquaintances, we all utilise our houses as we are (relatively) healthy.
But why bother when you can make some young working families struggling to pay for essentials pay for your mansion while you rot away in 1 room and can't make it up the stairs….
Say, what? How can young working families “struggling to pay for essentials” afford payments for ‘mansions’?
We worked hard to ensure we could live off our superannuation as long as possible to NOT be a burden to younger taxpayers. BTW: we are also struggling to pay for basic living costs due to inflation and all the other factors affecting everyone. Oh, and our Super took a nosedive with the current market downturn (again) so it's no picnic for us supposed 'millionaires'.
Stirlo, perhaps when you mature a bit and live in the shoes of an older person you might have a bit more understanding instead of what appears to be blinding jealously over a small sub-set of people who may fit your ‘millionaire mansions’ dwellers ideology.
Besides, these values are only on paper. Our house is now ‘worth’ three times what I paid for it 30 years ago. Big deal. Guess what? If we sell, I’m buying into the same over-inflated, unrealistic market unless we’re willing to move to some backwater to have a ‘profit’.
I wish more people realized this, most 'millionaire' pensioners can never access that money while they're alive, which is a lose-lose for everyone involved
But we can easily kill two birds with one stone here through mandatory reverse-mortgages, each pension payment is added to a 'tab' (similar to HECS), and then the government is paid back from the estate at the end. Would lower the total cost for pensions by billions, with essentially no quality-of-life downgrades, seems like a perfect middle ground
The initial reason super was introduced was to try to reduce inflation (allow pay rises without allowing spending to increase) so allowing access due to inflation would be entirely counterproductive.
Depends on how it's go to be used some have wasted money they have gotten out of their super .
Ive put extra into my super over the years and for my expected needs for retirement I'm well in front.
But it would be nice to take some and pay off the house now. Say if you reach a certain amounting super that the government says well your been contributing extra over the years we will let you withdraw some.
You also have to think how much of that super money can you access when you hit retirement age. What if you get cancer or have a broken leg? And you die at 80 only able to access a less than a quarter of what you put into it.
Conversely is it better to use that money to buy property now and have less stress, which you could sell at retirement age and have access to 100% of that money, assuming you have been living there and don't have to pay any CGT.
Hell naw!
Yes please
Soon one may receive "inflation relief " from Govt , just like California is about. :)
If it's cash handouts, let's hope not. What a stupid idea.
Generally speaking absolutely not - inflation is partly caused by too much spending. If everyone gets an extra 10k we will have much higher inflation and interest rates.
It should continue to be allowed on a hardship basis for those in genuine hardship.
$10k? What are you going to do with a dozen heads of lettuce?
Damn some people are stupid
Just goes to show how brainwashed the murdoch media empire have made Australia
Superannuation was brought in to get rid of the pension.
You let people spend it early on and you'll never get rid of the pension, then people will cry that that they're poor and labor will have to mop up the liberals mess once again Just like covid
Should just have the pension, cheaper than super.
Well
At least if you're on the pension you can blame the government for your poor financial decisions when you did think thay blowing $10k on an overpriced car was a good idea.I'm interested in how a pension is cheaper than super though?
By offloading the cost onto the future generations?
Greece tried that
Blew up in their face@ely: Wasn't talking about tax concessions though?
Merely making sure mandatory contributions stay in super.Yes additional contributions are a cheap way to dodge tax.
Only thing about pension is that you can contribute your whole life and the government can change the payout rate at a moments notice, just like in Greece.@Drakesy: I am talking about the tax concessions though, that's what makes super so expensive compared to the pension.
You can contribute to super your entire life and the rules can be changed too, what makes you imagine they can't?
Super is a huge tax dodge, primarily used by the wealthiest segments of our population to cut their income tax. This costs the taxpayer money as lost revenue.
Ely actually raises a good point, at some point paying all old people a few hundred dollars a week is cheaper than allowing super tax concessions. However I very much doubt it plays out like that, especially now that concessional contributions are capped
@greatlamp: Capping super is definitely a good thing but it still would benefit the wealthy more than the poor. The wealthy can make after tax contributions of which gains within super are then only taxed at 15%
That can be a significant tax dodge if you're investing large sums of money as you're approaching retirement.
Imagine someone earns a million dollars a year and invests half of that in shares. They make 50k on that and have to pay 22.5k in tax. Alternatively they could invest it inside their super and only pay 7.5k in tax
@Mr Haj: The cap has already been lowered to $27,500 per year. The loophole you are describing has already been closed
@greatlamp: You're referring to the concessional cap. I am referring to non-concessional contributions. Turns out I'm wrong too though. There is a non-concessional contribution cap of $110,000 p.a. so you can't just chuck all of your money in there.
So wealthy people can add $137,500 to their superannuation each year. Any gains within super are only taxed @ 15%
@greatlamp: The evidence suggests it plays out exactly like that.
Look, I'll keep on putting a tax deductible $27.5k into my super every year as long as they allow it, but it's a very stupid (and expensive) policy that Labor is inexplicably proud of. I'm a left leaning voter and just cannot understand how such a pro-wealthy pro-high-income policy is so beloved.
Problem is preservation age is around 7 years before pension age.
Blowing a million dollars in 7 years then relying on the pension is very tempting.
Yeah dump your super assets cheap during this downturn and then pump up the price of food, fuel and rent with all the extra cash. Great idea!
Super should be scrapped anyway, awful policy that fails in pretty much all ways, but unwinding it should be done cautiously.
Good rundown on the issues here
Super concessions projected to cost more than they saveThe benefits flow overwhelmingly to high income earners and the wealthy, the system costs a shitload, and effect is to lock in and exacerbate lifetime earning inequality.
Just look at Singapore where they don't have a super system and the pension is nothing.
They literally work you until you die, 80 year olds still doing manual labour and kids have to financially support their parents until they cark it.
There's laws as well if your kids don't help pay for their parent's care.If you'd rather not gracefully retire then yes go for it, abolish super.
You're missing the point; the huge amount of money funneled towards the wealthy and high income earners via superannuation tax concessions should be used instead to improve the pension. It would literally be cheaper as well as having better outcomes.
As it is, if you're wealthy you'll have an even better retirement, while if you're earning shit you're still going to have a shit retirement.
Yes, but only because I know super wont pay off like they promise. The rules will change & the age you can access it will increase so eventually all that cash I will have in super will evaporate/be useless when I could actually use it.
I could invest it better myself.
I could invest it better myself.
Maybe you could, but most people wouldn't.
They'd spend it, and the next generation would be paying for our retirement.
A lot of boomers that I know only have their house and their super as assets. The rest of their money gets spent.
What’s stopping you from setting up SMSF?
I cant invest in my own business or property I am improving/own directly, which is where I make the most returns.
Instead my super gets to make a fraction of the income I end up spending on interest for loans.
Eventually all that cash I will have in super will evaporate/be useless when I could actually use it.
What? Why? Your fees exceed your returns? Maybe at the moment because we're in a downturn. Unless you are using the worst fund in Australia.
I could invest it better myself.
I doubt it. You think you can outperform super including all of the tax breaks you receive within it? I don't even think you understand how it works.
I assume he means how a lot lost super in last few years, and still had to pay $350 admin fee and insurance ($100 odd).
Super's fee structure still sucks for people not working full time, even with the newer rules to restrict them emptying bank accounts.The rules for super change & that cash is completely out of my control. I have no doubt that as I age the official retirement age will keep increasing until I am too old to even spend the balance unless I dump it all into some overpriced rort of a retirement home.
^^ Yes - This is my thoughts
That would make inflation worse and work against policies trying to reign in spending to decrease inflation.
I was trying to find the article that I showed my teenager to explain inflation and interest rate rises concisely, but couldn’t. He/They had asked why interest rates would be put up when the cost of everyday items were going up. I’d explained that in very broad terms it was to reduce household disposable income to reduce spending and make purchases on credit less attractive (I know that is possibly an over simplification). The below ABC article explains the issue, though there was a previous ABC or Age article which explained the issue better (and better than I can here):
Raising interest rates to combat inflation is a bit of a blunt instrument, you might find this comparison between countries interesting:
https://www.visualcapitalist.com/interest-rate-hikes-vs-infl…
New Zealand has been very successful in keeping inflation low by raising rates.
The UK has raised rates at a similar level, and achieved nothing - inflation is soaring. Likely because the EU which surrounds them has done nothing to combat inflation - UK banks and industry can simply source funds outside the country and continue spending, while their population suffers under high domestic interest rates.
Yep, agree it is a blunt instrument and it works slowly. It does work better than just hoping people will reign in their spending (especially on things that have risen steeply in cost).
Folks who want to dip into their Super when inflation has BARELY started yet - remind me a tad of Aesop's 'The Grasshopper and the Ants':
https://read.gov/aesop/052.html
Found Scomo's account.
Too much money circulating in the economy is what's causing inflation. By releasing super you are simply injecting more money in to the economy and further increasing demand and making inflation worse. People need to stop spending money to get inflation under control.
Not just people. Governments too.
Crazy talk. Unfortunately causing pain in the economy is the only way to get prices to fall.
You can already for emergencies (i.e. medical expenses, defaulting on mortgage).
Nothing like getting inflation under control by giving people more money to pay for more things.
Super shouldnt even be a thing, it's your money ffs if you want to spend it then you should be able to.
Yes, then we will have all the geniuses with no money in retirement.
That's their problem.
No, it's not, it's societies problem, and will fall onto the taxpayer to pay.
@brendanm: They WERE a taxpayer though. Maybe if the country weren't constantly wasting money on bullshit they could afford to do pensions like other countries.
@Dowhatuwant: We have super, we don't need to do pensions. If super runs out, the pension is still there anyway.
@brendanm: Why do ministers get massive pensions and we just get crappy supers where we are forced to invest via specific corporate entities?
@Dowhatuwant: They don't get that anymore, but I don't agree with it anyway. Politicians always look after themselves first.
forced to invest via specific corporate entities
People are stupid, and spend every cent they get on crap, given half a chance. This gives them money for retirement that they can't touch, and reduces the burden on taxpayers. You are welcome to set up a SMSF and invest it as you see fit.
@brendanm: Supers are stupid too most of the time though and have crap setups where 30-40% of the super held as cash in the default investment strategy anyways. You have to specifically know what you are doing to change it to a High Growth setup or most custom options where its actually properly invested. Then there's all the fee's etc.
@Dowhatuwant: There are fees if you just stick money in an ETF. You are free to change your investment strategy in your super fund, or take it out, and manage it yourself.
@Dowhatuwant: The defaults are safe, as people get very upset if their balance drops at all, as we can see lately. If they had everyone automatically in high growth, they would have a lot of very upset risk averse people.
Maybe stop having smashed avocados instead of dipping into your super.
"Inflation is out of control - should we dump heaps of extra cash into the economy?"
It's big brain time…
The concerning thing about this question is that it shows that there are a lot of people that don't understand super even at a fundamental level, let alone at the detail level (where it gets even more confusing).
The fact that people were allowed to dip into their super, despite all the COVID handouts, was an exceptionally short sighted policy decision from the previous government and if anything shows how bad some of their policies were thought out.
The amount of people that used the $10k to buy hobby cars during that time is astounding.
We're going to have a generation of people living off the government during their retirement. Assuming there is any money for a pension at that point.
It just shows they have no idea how economics works. Victim mentality.