Politicians must steel themselves to fix a mess that will keep growing.
HAVE you noticed? Our guardians in the superannuation industry have come out swinging to defend us against the changes to super announced in the budget. Mark Payne, a partner in the legal firm Hall & Wilcox, says: "Anyone that has turned 50 can feel dudded."
The changes "will be costly to administer, bring little revenue for the federal government and are a real disappointment for the over 50s, who will need to reassess their retirement strategies", he says.
According to John Brazzale, managing partner of the accountants Pitcher Partners, "There's now less incentive to put money into super, particularly [for] those earning more than $300,000. They would be looking at how to get a better tax return by investing outside of super in, for example, businesses and managed funds."
One of his partners, Brad Twentyman, agrees. "Superannuation at higher incomes has become very marginal, and there is nothing compelling to drive self-sufficiency in retirement," he says. "This is not the system we should be aiming for. We need to be encouraging higher-income earners to save for their retirement as well as lower-income earners."
David Anderson, the managing director of financial services provider Mercer, warns that "continual changes to superannuation will create a wave of uncertainty, confirming the commonly held view that superannuation is an irresistible honey pot".
He says there "is a risk that further complicating and continually changing the rules in superannuation will reduce investor confidence in super and that would be a most unfortunate outcome".
Sorry, but most of all that is self-serving tosh. For someone who has turned 50 to feel "dudded", they also need to be earning more than $300,000 a year (putting them into the top 1 per cent of taxpayers) or to have a super account balance of less than $500,000 and have been in a position to sacrifice salary of up to $25,000 a year.
The two decisions they're complaining about are to reduce the tax concession on super contributions by people on more than $300,000 from 31.5? in the dollar to 16.5?, and to defer for two years the promise to raise the limit on concessional contributions from $25,000 a year to $50,000 for people aged over 50 with balances of less than $500,000. Few people on middle incomes could have afforded to take advantage of the higher limit.
The media have a tendency to quote uncritically business spokesmen who want to have a crack at the government, but most are wolves in sheep's clothing. They claim to be speaking in the interests of their customers, but for the most part they are, in the money market phrase, "talking their book" offering advice that serves their own interests.
Even when measures have been carefully targeted to hit only the well-off, they'll be shedding bitter tears and predicting dire consequences. Why? Partly because they're very highly paid themselves, but mainly because they make more money out of the rich than the poor.
The guys who run super funds are in the ticket-clipping business. They take a tiny nick out of every dollar that passes through their hands, and since our super savings total $1.3 trillion, those tiny nicks add up to very big bucks.
The super industry which includes not just the fund managers but also the (often union) trustees and the myriad outfits providing advice to them is among the most lucrative in the country. These guys pay themselves extraordinary salaries.
And it's not just that clipping tickets is such a deceptively cheap way to make a fortune. It's also that, by compelling all employees to save 9 per cent of their wages, the government has delivered them a huge captive market.
Not content with that, however, after years of agitating they've finally persuaded the Labor government to phase up their monopoly from 9 per cent to 12 per cent at a huge and ever-growing cost to the budget in tax revenue forgone.
When this and other favourable changes were announced in 2010, no one in the industry was claiming continual changes to super were discouraging people from saving. They trot out this old favourite only when governments make changes that hit the industry's revenue.
Contrary to the claims we've heard, few people will need to "reassess their retirement strategies".
The proposition that the highly paid need to be bribed by tax concessions to put money aside for their retirements is laughable. Why would they be planning to live only on the age pension? And even if they do turn away from super to other ways of saving, why is that a problem for anyone but the super ticket-clippers?
When you combine this government's plan to ramp up super with the changes Peter Costello announced in 2006 to make super payouts tax free for those 60 and over, to sanctify the salary-sacrifice loophole and to ease the assets test on the age pension you see it's not adding up.
The annual cost of super tax concessions is now growing so fast it's projected to equal the annual cost of the age pension by 2015-16. Such growth is simply unsustainable.
Now add the fact that the concessions go disproportionately to high-income earners, as well as advantaging the retired generation over the working young. The old don't pay income tax, but the young do.
Unless the pollies are brave enough to fix the whole mess, they will go on fiddling at the edges of the super arrangements in most of their budgets.