NEW battle lines are being drawn for the next Federal Election, which is due by 20 May, 2028. Many of us might be thinking that 20 months is too early to offer policies for scrutiny, but the Government seems to be desperate to change direction away from its present economic malaise.
Surprisingly they have chosen superannuation as their fighting point, a policy that lost Bill Shorten an election in which the outsider Scott Morrison gained the win. This was due to present Treasurer Dr Jim Chalmers’ attack on the assets of the retired community, plus everyone else who was saving for super.
The argument for change is interesting, given the fact that former ALP PM Paul Keating set up a really successful scheme, which included retaining Franking Credits on investment income when held in super. These became a cash flow bonanza for the fund and its beneficiary.
Superannuation is all about saving income during your working life in order to provide for greater income opportunity when retired.
It also saves the government from needing to provide pensions for those who save during their working life, plus offers tax relief as an incentive to attract you into super.
The trick with super has always been the need to remain alive until you reach the required age where you can retire and enjoy a tax-effective income in your remaining years.
The other side of super is the argument that these savings are your money and there are people who have specific needs for their money earlier than retirement. They may need to buy their first home, for example, or encounter medical issues that need immediate and substantial financial expenditure.
I’m not taking sides in this debate as that will probably be decided at the next federal election and, of course, the desirability of having your super in place to grow until retirement needs to be matched against other needs that may be of immediate benefit to that particular super investor.
The one area not being discussed is that of the tax benefits that super savers have received while the protective treatment of super is in place.
Should those needing to cash in their super early then be required to refund their tax savings to the government,
who will be required to pay that person a pension at their eventual retirement?
No easy answers in this debate.
By John BLACKBOURN
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