If you are feeling a little battered and bruised from the announced changes in the budget regarding Superannuation, you aren’t alone.
It often seems that there is no logical explanation to moves made in this area and an onlooker might be excused for thinking that the government sees the superannuation sector as the goose that laid the golden egg or the fix all for whatever ails the economic situation at the time.
One or two things appear to be overlooked. We all know that solving one problem may create a greater problem and it seems that the government have totally disregarded the principal of confidence. Confidence in a system is an intangible however it is so powerful it has the potential to make or break even the strongest of financial markets. That being the case why not then the superannuation system? The proposed changes are just another chip in the confidence that Australians have in the superannuation system and many will be feeling, “what is the point?”
It would be fair to say that over their employment life the average Australian makes financial sacrifices to endeavor to accumulate some retirement savings with the knowledge that it is unlikely that they will be able to rely on government assistance in their golden years. As hard as it might be for politicians to comprehend for some even finding modest amounts above the SGC to put into superannuation is a sacrifice, but for years we’ve been told that even a little extra can make a big difference.
The changes announced simply do not encourage a savings mentality at all. It also seems like the government have lost sight of the value of a nation that prepares to avoid being a burden on the public purse.
We all know that when people feel well off they generally spend, and self-funded retirees are possibly the largest group of indulgent spenders. Spending and particularly spending that is not funded by credit not only creates jobs (and growth) but also adds to the GST collection pool. So while cashed up retirees may currently be seen as getting a free ride, the better idea would be to encourage them to spend up because while they are spending they are taxpayers.
Liz Gibbs – SMSF Manager