More People Look to Alternative Options for Superannuation

Constant changes to superannuation laws are pushing people to look for alternative places to park their retirement savings, according to fund managers.

While the tax advantage of super is a major drawcard, the uncertainty of having the money locked in a system that is constantly changing means this may no longer outweigh the tax benefit, they say.

Superannuation is a trillion dollar honey-pot that no government can resist tapping to fill in holes in the national budget,’’ Australian Unity’s Lifeplan director Matt Walsh said.

Many investors are increasingly concerned that at some time in the future they will either be taxed more or have severe restrictions placed on their ability to freely access their retirement nest egg.’’

Some of the tax advantages of super were available from other investments such as investment bonds for through a family trust structure, he said.

For low-income earners, investing in their own name could also have benefits.

We use to say there were two certainties in life, death and taxes,’’ Mr Walsh said.

Now we say there are three, death, taxes and government tinkering with superannuation.

People are really worried about it and diversifying in to other investments and structures is a good idea.’’

Wealth Within investment analyst Janine Cox says more rule changes were expected.

The main benefit with superannuation is the tax concessions, however, an investment based solely on trying to save tax is not the best strategy to build wealth,’’ Ms Cox said.

  • John Phillips

    Hi Dale
    I realize yr site is not really for such as these questions or comments but here I go anyway

    A few people in business have said to me that the mining industry has “engineered” the economic downturn esp in the mining industry so as to make current economic climate look worse for the incumbent govt labor party. What do u think of those comments ??

    Have you seen this comment ?? (honors go to Scott Pape)
    Abbott’s Paid Parental Leave scheme promises that mums will get full pay for 26 weeks (meaning high-earning women will get paid close to $3,000 a week for six months). It’s one of the most ridiculous pieces of policy largesse I’ve seen in years – and that’s saying something. (Tony should take off his economic conservative’s blue tie and call this stinker of a policy for what it is – a multi-billion-dollar bribe to shore up the female vote.)

    My dissertation below relates to Qld but I suspect it could apply to other states

    This opinion refers to the fact that we have evolved to a dire state of affairs where the actual work and systems needed for the generation and network distribution of electricity is now only a fraction of the overall costs being borne by the consumer. There are enormous superfluous extra costs now within the electricity industry mainly arising from events during the 1990s . It explains how these extra costs have arisen; which is from the 1990s until now arising from the restructuring of the industry. The actual work and the systems required to supply power has become a secondary component of the cost to the consumer. Note that this dissertation does not infer any ideology or political bias

    In the mid to late 1990s, the State Govt restructured the electricity industry from a mostly single entity to several organisations. From the Qld Electricity Commission (QEC) to several Govt Owned Corporations (GOCs). The QEC generally covered much of the Qld population except for lower level distribution for which responsibility resided in local regional boards. At that time; we evolved to a state where only a fraction of the overall costs is involved in the actual generation and distribution of electricity (poles and wires etc)

    At the time, the QEC was replaced by about 10 GOCs. Such as Tarong Energy, CS Energy, Stanwell Corp, Enertrade, Ergon, Group Energy Trader, Powerlink, Austa Energy (there were others)
    Upon formation, each one of these GOCs needed to have the following examples of departments. Administration, I.T., H.R., Purchasing, Legal, Finance, Planning (there are others). As a rough estimate I suppose we could look at about 10 of these existed previously within QEC. It then follows that we have gone from that number of 10 to say a quantity of almost 100 ? I am not claiming that the QEC was particularly efficient but as shown above it would have been quite lean compared to the situation today.

    The main issue is the burgeoning management resulting from these changes. Due to the multiplicity of GOCs, we not only have multiple replications in the number of similar functions repeated over these GOCs but also the creation of new roles. New roles such as; Boards of Directors, CEO, CFO, CIO, Trading, Risk Management, Business Development, Marketing, Sales and so forth. Salaries within upper management and to some degree within middle management are extremely high, not really supportable and a very high burden on users (the customers). Also what tends to occur is a sense of entitlement filters down through the ranks of these organisations resulting in upward pressure on wages meaning further burdens upon the consumer.
    Adding to these expenses were the costs of various infrastructures required to support the new GOCs. For example such as the initial setting up and ongoing accommodation leasing of separate multiple office buildings for the staff. These offices did not exist before, were all of fairly large footprints, tending to be rather luxurious and many within the CBD of Brisbane.

    An example in a different industry relates to AllConnex (water) which was disbanded due to the efforts of people power. At the time this was being formed it would have had all the management functions and issues similar to those I mentioned above (Boards, CEO Etc). If it had gone ahead there would have been all the costs involved in building a new Head Office edifice (I think it was on the Gold Coast). I seem to recall that certain dedicated local people caused the reversal of this decision thereby dodging an unnecessary and expensive ‘bullet’ for the residents of Redlands, Logan and the Gold Coast. I believe there was mention of; how many homes water bills would it take just to pay for the CEO salary and related expenses (I think there was mention of over a thousand homes).

    Yet another industry to compare is Australian Telecommunications. When this industry was initially restructured in the 1980s; the “Rest of the World” was invited to enter and offer to compete. That is; compete against the single entity named Telecom Australia (as it was known as then). The result was the emergence of such Optus, AAPT, Vodafone etc. I think the overall population of Australia is about 5 times that of Queensland. If the Qld restructure model was used; there would have been a ludicrous situation of the break of Telecom Australia into multiple organisations. If similar had been done as in the Queensland Electricity Industry break up there could have been almost 50 Telecom Australia Corps.

    In relation to the many Electricity Retailers.

    One would also consider the above issues to be problematic in regard to the many Retailers that now exist (who do very little in the way of generation and distribution). That is
    – burgeoning management due to multiplicity of similar functions
    – creation of new roles such as; Boards of Directors, CEO, CFO, CIO, Trading, Risk Management, Business Development, Marketing, Sales and so forth.
    – Salaries within upper management and middle management
    – sense of entitlement down through the ranks
    – costs of various infrastructures required to support and ongoing accommodation of separate multiple office buildings

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