January 2010 Update

Happy New Year to all of our SuperGuide subscribers.

• Living in la la land – super and the Henry tax review
• Top 20 articles from 2009 – check out the most popular SuperGuide articles over the past 12 months
• Top 10 articles receiving readers’ comments
• Most frequent word searches for 2009 – top 10

LIVING IN LA LA LAND – Henry tax review

I am writing this quick email to you, to provide some context to the articles that have appeared in the weekend newspapers about the Henry tax review. Although the Henry tax review report is not a public document the Government has deemed it appropriate to ‘leak’ the document to certain media channels to prepare the Australian people for possible tax changes.

Note that any changes reported by the newspapers are only recommendations and may or may not occur. You can expect that if the Government has leaked this report that at least some of the reported changes will come to pass.

This drip-feed approach by the Federal Government is at best irresponsible and at worst… I’d rather not say.

Publishing the Henry report is a great idea and it should be available to all Australians; not just a select few journalists. I repeat: the Henry report is not a public document and I can only comment on what has been reported in the weekend papers rather than provide you with considered commentary based on reading the original document.

Dr Henry has apparently recommended at least four superannuation-related changes which should really be part of the Cooper review process (I explain the Cooper review in the SuperGuide article What the heck is the Super System Review?). The leaking by the Government has effectively pre-empted any final report produced by the Cooper review, and discredits the Federal Government’s entire review process – which report is to take precedence in the area of super?

The four main superannuation recommendations reported (The Age, 23/01/10) to be in the Henry tax review report are:

• Don’t increase the 9% Superannuation Guarantee (SG). The reason reported for keeping SG at the 9% level is that the Henry review believes that 9% of person’s salary contributed to a super fund is going to be enough for the generation that enjoys SG for their entire working life, and will provide an income well above that of the Age Pension.
• Swap super payout for a Government-backed guaranteed income stream. The Age article states that the Henry report indicates that longevity risk (outliving your super) is a huge issue and that a longevity product should even perhaps be compulsory for fund members. The Government would be the provider of this guaranteed retirement income stream.
• Adjust tax incentives on super contributions so higher-income earners and lower-income earners receive same tax benefit. Currently, higher income earners receive a higher tax incentive because of the way marginal tax rates work.
• Delay access to super until age 67. The Federal Government has already announced this change will not happen.

Based on this list of superannuation recommendations, I humbly suggest that Dr Henry should perhaps read my book Superannuation For Dummies, or some of the questions from readers published on the SuperGuide website for some background information on how the real world of superannuation operates. In particular, a recommendation that SG should be left at 9% because Dr Henry believes adequacy is not an issue over the long term, contradicts with the recommendation that most Australians are going to outlive their super savings and will need to purchase a guaranteed income product

I will have more to say on each of these recommendations in the February edition of the SuperGuide newsletter.

TOP 20 ARTICLES FROM 2009

The SuperGuide team regularly tracks the most popular articles on the SuperGuide website to monitor that we are meeting the needs of our SuperGuide readers. Your comments and questions also assist us in providing you with the most relevant information. The 20 most popular articles for 2009 were:

1. $32 per week increase in single Age Pension
2. 12 legal reasons to cash your super
3. Age Pension: September 2009 rates and thresholds now available
4. New income test for Age Pension
5. Generous Pension Bonus Scheme to close 20/9/09
6. Jump in contribution limits for 2009/2010 year
7. Age Pension set to increase from September 2009
8. Age Pension: Is my super benefit counted towards the Centrelink assets test?
9. Super rates and thresholds for the 2009/2010 year
10. The short story on super contribution limits
11. All super payments count for Seniors Health Card from July 2009
12. Mirror, mirror… what super fund is the best-performing fund of all?
13. Age Pension income test: Does my superannuation lump sum count?
14. Accessing super: Turning 55 is not enough
15. Are you eligible for a Commonwealth Seniors Health Card?
16. Setting a retirement target: Living on more than $50,000 a year
17. I’m leaving Australia: Can I access my super?
18. Goodbye Pension Bonus: Hello Work Bonus
19. 2010 checklist: 10 super tips for a financially healthy retirement
20. A comfortable retirement: How much super is enough?

TOP 10 ARTICLES RECEIVING READERS’ COMMENTS

Thankyou to all the readers who have submitted comments to our website. The 10 articles that have received the most comments are:

1. 12 legal reasons to cash your super
2. The short story on super contribution limits
3. Age Pension income test: Does my superannuation lump sum count?
4. A comfortable retirement: How much super is enough?
5. Age Pension: September 2009 rates and thresholds now available
6. $32 per week increase in single Age Pension
7. Are you eligible for a Commonwealth Seniors Health Card?
8. Age Pension set to increase from September 2009
9. All super payments count for Seniors Health Card from July 2009
10. THE SOAPBOX: Fair go for retirees and super savers

TOP 10 SEARCHES FOR 2009

The words/terms most frequently searched for 2009 were:

1. Transition to retirement
2. Centrelink
3. Co-contribution
4. Age pension
5. Financial advice
6. Allocated pension
7. Property
8. Salary sacrifice
9. Spouse contributions
10. Work test

Thanks again for your support and interest during 2009. I can promise you that 2010 will be a very dynamic year for those with an interest in superannuation.

Regards

Trish Power