Tag Archives: compulsory super

Who To Believe On Super?

16 Aug

From ABC Insiders:

BILL SHORTEN: Well in the last two years, and whilst the final figures haven’t come out from last year, Chant West who are one of the organisations who monitor [superannuation fund] returns show that the year before last the returns on average for a balanced fund was 8.9 per cent. The year just passed – 9.2 per cent.

From ABC TV’s Alan Kohler in Business Spectator:

For the past five years the market has given nothing. After the 20 per cent correction between April 11 and August 8, the ASX 200 accumulation index (capital return plus dividends) has now produced a zero five-year return.

From ABC Insiders:

BILL SHORTEN: As an actual investment product super’s done reasonably well over the last 20 years.

From Alan Kohler:

The first fifteen years since the superannuation guarantee legislation was first introduced in 1992 went extremely well. The compound annual rate of return provided by the sharemarket – like manna from heaven – was 15.5 per cent…

Of course, not all that return dribbled into the members’ accounts: the superannuation industry, consisting of advisers, platforms, fund managers and the super funds, were furiously skimming the accounts and getting gloriously rich.

Still, anyone retiring in 2007 was a big winner and didn’t begrudge the skimmers their little portion. Everyone was a winner!

But now life has changed completely. The five-year total return from the sharemarket is zero; the 20-year total return is now below 10 per cent; the ten-year return is just 6.6 per cent. The fees skimmed off by the industry – which of course continue even though the balances have gone backwards – now represent a much larger percentage of the long-term return.

Suddenly accumulation super lacks the vital ingredient of accumulation. And there is a clear risk that the bear market will continue for some time yet, with both Europe and the United States mired in debt.

From ABC Insiders:

BARRIE CASSIDY: So what do you say then to people who got a bit of a fright this week, that they’ve just got to hang in there?

BILL SHORTEN: Well certainly if you’re right at making a decision to retire in the very near future, if you’re a self-funded retiree and you’ve got a portfolio of shares, this has been incredibly tough; just as was the first global financial crisis in 2008.

But I would say that now is not the time to make snap decisions. I would say that in the long run superannuation in the last 10 years, say if you’ve been in an industry fund, it’s been 4 per cent each year. I would say that the shares market generally has performed well in Australia. I do believe that things will improve.



Why is it that anyone other than politicians who gives financial advice, has to be licenced to do so, or risk facing the full force of the law?

Now The UK Government Is Stealing Super Too

5 Jul

From the Daily Post, 1 July 2011:

Thousands of teachers, lecturers and civil servants joined a UK wide strike yesterday in a mass protest over pension reforms.

[NB: other countries call their supernannuation “pensions”]

More than 200 schools were closed or partially shut, across the region with lectures cancelled at colleges and universities, and disruption at courts and Jobcentres.

An estimated 7,000 members from University and College Union (UCU), the Association of Teachers and Lecturers (ATL), the National Union of Teachers (NUT) and the Public and Commercial Service (PCS) were involved in the action in North Wales.

In Wrexham all four unions were represented at a mass rally involving well over 100 members in the town centre’s Queens Square, joining the other 750,000 across the UK.

They accused the Government of betraying promises to give public sector workers and teachers a fair pension and claimed they were siphoning off billions to pay the black hole left by the banking crisis.

And they warned this was just the beginning demanding the Government think again.

Shouting “Shame on you” at the Government, President of the NUT in Wrexham Ian Farquharson, a teacher at Rhosnesni High School, said: “The Government are stealing our pensions.

“If they tell us there is no other option, then publish the figures and let’s see them – but they wont.”

Steve Ryan who sits on the PCA Wales committee said: “The banks have been paid £7 billion in bonuses, there is £120 billion in uncollected taxes from the rich because they avoid paying them and the pension money is going to fund this. It’s a disgrace.”

From the Guardian, 30 June 2011:

The government … wants to impose a 3%-of-pay levy on public sector workers’ contributions to help reduce the budget deficit. This amounts to a pay cut to follow on the heels of the current pay freeze.

The UK Government’s plan is remarkably similar to that of Ireland.

As we saw only weeks ago, the Irish Government too has announced a raid on citizens’ super, to raise funds to pay for their budget black hole. The difference being, the Irish Government is imposing its “levy” on both public and private workers’ pensions:

Irish Bombshell: Government Raids PRIVATE Pensions To Pay For Spending

“The various tax reduction and additional expenditure measures which I am announcing today will be funded by way of a temporary levy on funded pension schemes and personal pension plans.”

There’s a clear trend developing here.

We have seen previously ( “No Super For You!!” ) that Argentina, Hungary, France, Poland, Bolivia, Ireland, and the USA have all either nationalised citizens’ super funds outright.

Or, imposed “levies” (ie, new taxes) on citizens’ super.

Or, as a more subtle beginning, simply reduced the amount that the government pays into government workers’ pension (ie, superannuation) funds. The equivalent to this in Australia would be if the government began setting aside (eg) only 5% of public servants’ salaries into the Future Fund for their retirement, compared to the compulsory 9% that private employers are required to pay for their workers.

We will not go into the issue of whether or not – just like the USA and many others – there really is money set aside for public servants’ retirement sufficient for the governments’ obligations (called “unfunded liabilities”). Indeed, there are very serious questions to be asked about this – and Barnaby Joyce has alluded to them – but we will leave that to another day.

In Western nations, the pattern of theft – the governments’ Modus Operandi (MO) – is disturbingly similar.

1. The country first sees its housing bubble burst – see USA, UK, Ireland.

2. Banks go bust, and are bailed out by the government (ie, by borrowing against the promise of taxpayers’ future earnings)

3. The cost of bank bailouts sends the government into deep, and unmanageable levels of sovereign debt (ie, private banksters debts, are socialised into higher public debt instead). The sovereign debt is made all the more unmanageable because the economy is badly damaged by the fallout from the housing bust. And, by hugely expensive, wasteful “green” public policy programs, in the lead up to the bust.

4. A “leftist” government is taken over by a “rightist” government.  Or, as with the USA, the “rightists'” regain the balance of power.

5. Prompted by the “fiscal conservative” rightists, new “reforms” are introduced. To “fix the budget”. Reforms that include raising the retirement age … and stealing citizens’ superannuation savings.

First, they come for the public servants’ super.

And then, they come for yours.

Now, what do we see happening right here in Australia?

Barnaby Joyce has already given at least two public warnings that the government is going to take public servants’ super in the Future Fund to pay down debt – pretty much exactly what the USA and UK are doing right now.

Already, the Green-Labor government has quietly introduced “incentives” in the latest budget, to “encourage” super funds to put your money into government “infrastructure projects”. You know, brilliant infrastructure schemes like overpriced school halls, and a technologically-redundant-before-its-finished, no cost/benefit analysis Nation Bankrupting Network (NBN).

And the Liberal Party – who if polls are any guide, will in all likelihood take power at the next election – have recently and quietly announced their own “reform” policy. One that even less subtlely aims to do the same thing – get the government’s hands on your super:

Further relief for small business

The Coalition will relieve the red tape burden from Australia’s small businesses by giving them the option to remit the compulsory superannuation payments made on behalf of workers, directly to the ATO.

Small business will be given the option to remit superannuation payments to the ATO at the same time as they remit their PAYG payments.

This will require only one payment to one agency – rather than multiple cheques to multiple superannuation funds. The ATO will be responsible for sending the money to superannuation funds directly.

In recent weeks we have seen countless evidences that:

1. Australia’s banking system is stuffed and ripe for collapse,

2. Our housing bubble is bursting, and

3. The economy is “stuffed”, with Eastern Australia in “deep recession” and the national economy “almost certainly” in recession in the second half of 2011.

The writing is on the wall.

I’ll now simply repeat the conclusion of my magnum opus article on the fate for our super:

If like me you are under 50 years old – indeed, if you are under 60 years old – then I’m willing to bet you all of my super that you will never see all of yours.

And unlike our bank(st)ers and government … I never bet.

First they came for the Yankees’ super.

Then, they came for the Pommies’ super.

And then last of all … they came for mine.

* For more information on this subject, please read –

No Super For You!!

Fresh Evidence Our Banks In “Race To The Bottom” Means You Can Kiss Your Super Goodbye

Why They Are Planning To Steal Our Super, Explained In 4 Simple Charts

Our Banks Racing Towards A “Bigger Armageddon”

US Treasury “Borrowing” Of Federal Pensions Brings Theft Of Private Pensions One Step Closer

25 Jun

Regular readers will know that this blog has been closely following the wave of government confiscations of private citizens’ retirement savings that is quietly rolling around the world.

It is a wave that is already silently lapping at our shores, with both major parties having released policies that sneakily move towards taking our super, to pay down government debt.

If you’ve missed any of these posts, you can catch up with the following –

“No Super For You!!”

“Why They Are Planning To Steal Our Super, Explained In 4 Simple Charts”

(There are multiple links to previous posts at the end of the 2nd link above)

One of the interesting features of this wave of super thefts, is the different methods used in different countries.  In some, private retirement savings have simply been “nationalised”.  In others, the government has started with a “softly softly” approach, by “borrowing” the retirement savings of government employees first.

In the following article from The Examiner (USA), we find the opinion expressed that the US Treasury’s recent “borrowing” of federal workers pension funds is simply a first move. And that confiscations of non-federal workers pension funds – called “401K plans” in the USA – is now one step closer (emphasis added):

This step in pulling from government held retirement funds is once again bringing up the potential for the Obama administration to seek acquisition of the public’s 401K’s to help pay for spending and debt.

On May 16th, the Obama administration agreed to tap into federal retirement programs to help fund programs and agencies that would otherwise be funded through borrowing before the debt ceiling was reached.

The use of retirement and pension funds as the first resort of the government to pay for programs, debt obligations, and even ongoing military operations is a large warning signal to the American people regarding a huge and untapped resource that up until now, the government has refrained from exploiting.  The amount of money stored in corporate retirement funds, federal retirements, and market based 401K’s amount to several trillion dollars that unlike Social Security, which it is collateralized by IOU’s, this is real money that the government has already sought to acquire in budgetary discussions.

The plan, as sketched in the 43-page document, calls for the creation of something called  “Guaranteed Retirement Accounts” (GRAs). Biden slyly shifts the onus for the idea through weasel words typical of the federal government: “Some have suggested the creation of Guaranteed Retirement Accounts (GRAs), which would give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk, and in some versions under discussion, would guarantee a specified real return above the rate of inflation.”

These accounts would be “free of inflation and market risk” because they would be under the direct and absolute control of the federal bureaucracy. There would be no risk because the funds would no longer be moored to the free market and subject to the fluctuations thereof. Rather, the retirement funds of every hard-working American dependent on a 401(k) for their retirement security would be nationalized and made subject to the whims and will of the executive branch. – New American (May 2010)

The track record of the Federal government towards retirement accounts is not very good.  Over $3 Trillion dollars has been removed from the Social Security trust, and spent by the government under general budget spending.  The money that was taken out of Americans paychecks each month to be used for retirement was instead replaced by Treasuries that are now on the brink of default.  With the Treasury Departments use of Federal pension funds now to pay for budgetary obligations because the government can no longer borrow money, the next viable step is the acquisition of private retirements and 401K’s.

And as noted from the 43-page document already created last year, this is not a plan regarded as a contingency, but instead as one that is intended to be implemented in the future.

The US government has failed in its opportunities over the past decade to cut spending, and slow down on its debt borrowing.  Now that the rubicon has been crossed regarding the debt ceiling, and the Treasury Department accessing federal retirement funds to pay for general obligations, how soon before the government has no choice but to access the trillions of dollars available in the market, and give the American people another ‘promise’ that they can take care of your money and retirement future.

In Australia, our two major parties have also begun planning for the theft of our super, but in slightly – and slyly – different ways.

The Labor Party has first announced (in the recent May budget) new legislation intended to “encourage” super fund managers to “invest” your super in government “infrastructure programs”.

The Liberal Party has taken a different tack. On June 3, they quietly announced a new policy – sneakily dressed up as a “helpful” business “reform” – that aims to have employers send their workers’ Compulsory Superannuation payments directly to the ATO, rather than directly to your super fund.  It would then be up to the ATO to pass on your super to your fund manager (!?!).

If you are unwilling to see the danger that lurks so thinly-veiled behind these “positive” and “helpful” policies, then consider this.

Senator Barnaby Joyce has directly warned at least twice this year, that the government plans to steal our super to pay down debt. And exactly like America, he has indicated that they intend to start with public servants’ superannuation set aside in the Future Fund:

In response to a question I put in Senate estimates, Treasury revealed that $64 billion of the difference between our gross debt and our net debt is made up of the cash and non-equity investments of the Future Fund. The Future Fund is there to cover the otherwise unfunded costs of public servants’ superannuation.

That is a little fact that the people of Canberra might be interested in. When Wayne mentions net debt translate that to, I am going to pay his debt off with my retirement savings.

Straight after the May budget, Barnaby spelled out his warning even more clearly:

On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.

Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.

The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.

Of course, the public servants will not be happy when we use their retirement savings, put aside in the Future Fund, to pay off some of Labor’s massive debt.

Stealing public servants’ superannuation in the Future Fund will only be the beginning. We can be sure of this, simply by looking at what is happening abroad. And by carefully examining the implications of the policies – quietly released, without fanfare – of our own politicians.

Barnaby is right.

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