Changes not retrospective
I am disappointed that your standard of journalism is such that you have adopted the populist but uninformed view that the lifetime cap on non-concessional super contributions is "retrospective". Of course a lifetime cap is measured from some time in the past - that is what lifetime cap means. If someone has contributed more than the cap since 2007, there is no requirement for them to withdraw it. The significant of the year 2007 is that contributions prior to that year do not count towards the cap. Your talk of retrospectivity and loss of trust is a storm in a teacup.
Withdrawal rates key
I read the letters to the editor more closely than usual this week after 2 were quoted in Robert Gottliebsen's column. Interesting comments by Simon. Whilst he says he has done the maths, I think he needs to look further.
Under the budget the liberals let you have $1.6m in your pension account. If you start with $2.0m then on I July 2017 $400k will have to be rolled back to accumulation mode and taxed at 15%. Regardless of what amount your pension account grows or shrinks to, you can never again top it up. So if in 2018 we have another GFC and the value of your pension account halves, you can't top it up. At least under Labor you can and the first $75k income is still is tax free. Whilst I'd be the first to agree that $75k is too low and $100k would be fairer, it is still better than the Liberal proposal unless you are both a supreme optimist as well as a great investor.
One thing that needs to be addressed is the minimum pension withdrawal rates. With official interest rates now at 1.75% and possibly heading lower, like a lot of retirees I have considerable exposure to cash and fixed interest and taking a pension of $80k/annum on my $1.6m will mean I will predictably start to eat away my capital with no way to top it up.
The withdrawl rates should be halved and it would be nice if the Eureka Report lobbied both political parties about those minimal withdrawal rates.
I am amazed that the carbon nanotube concrete additive developed by Eden Energy is still going under the radar of Australian financial commentators although the stock price has increased by nearly 30X in one year. Today a major investment by US investment funds was announced. Is this revolutionary technology going the same way as many other Australian inventions without anyone noticing? The US State of Georgia has welcomed it with open arms.
An Australian parable
There was a village with a green grass common where all the animals used to feed. The older villagers fertilised the grass to make it grow. The animals grew fat, sold for good money. The village grew rich with new buildings built for outsiders.
For a better aspect the town burghers then decided to cut the common grass. They cut and cut and cut. The animals now had to feed on what they could find, they could not eat of the fertiliser. So no-one wanted to buy the village animals anymore. The village grew poor, the outsiders didn’t live in the new buildings. The poorly paid having nowhere to live. So it was the town burghers who became the village idiots.
Isn’t this what has happened to the Australian, US and European economies? If the grass is our interest rate, the fertiliser our savings, the animals our resources; logically then, surely our free economies must fail. A balanced range between interest rates, resource production, money supply and housing is required.