After Meeting Treasury – 3 Pieces Of Advice, Gave Them, Get Set For More Market Volatility, Spring Property Review
I was a very grateful guest last Thursday to discuss with representatives from Treasury and CEDA (Committee for Economic Development of Australia) my thoughts on retirement and where the average Australian is at with superannuation. In my opinion I have some very simple ideas which I told Treasury and that massive reform that needs to take place to reduce the reliance on the age pension.
Retirement generally means you have 2 assets – a home and superannuation. However as a nation we are more interested in the value of our homes (generally a non income producing asset) than the value of superannuation. And then when we look at superannuation seriously when we get to age 50 we have a cap on how much we can put in!
So my reform ideas:
1) If you do not use your full concessional cap, the balance should carry forward.For example, if at age 35 you put in $5,000 into super when your cap is $30,000 then the following year you should be able to carry forward the $25,000 allowing you to put in up to $55,000. I know the same cannot be said for carry forward internet usage however I believe it would work and allow the pre retirees a incentive to contribute more..
2) The word compulsory superannuation has to go, uniforms at school are compulsory and people resent them and Australia resents superannuation. So the name needs to change to retirement allocation or retirement top up , I do not know but I am happy to take ideas.
3) Make all working Australians contribute to superannuation. We are in an environment where more Australians are becoming consultants or contractors and they do not feel obliged to contribute to superannuation. So make it simple, whatever your taxable income is regardless of how you earn it, 9.5% goes into super,
All of these ideas have the potential to reduce the burden on the age pension. So lets watch this space and see what Treasury will do about it.
On a different notea couple of weeks ago we were asked what is a comfortable retirement and how muchdo you need?The Current Affair interview can be viewed here.Click here to see our thoughts.To market news just another standard week last week of market volatility, Australia with sluggish GDP growth, current account blowout, dollar at 6 year lows below 70 US cents, share market upheaval globally.
Remember to hear my finance updates on Tom Elliott’s Driveevery Thursday from 3.30pm where I take your calls on anything finance! If you missed the latest showsclick here to listento the highlights.