Superannuation, the ultimate government cash cow?

[Bellcose]

a problem that appears to be getting worse

Yes. No surprise there are practitioners encouraging people to access their superannuation for dental and cosmetic treatment. In addition, many consider it "their" money and combined with wanting to feel or look better.

Now if the Government in it's wisdom (?) decided to introduce legislation preventing access to superannuation for all these treatments except under extreme circumstance - which would be a loop hole which many would attempt to use - I would expect to hear strong objections from various quarters along the lines of "It is discriminating against people who require this work, is detrimental to their well-being and causing mental anguish, blah, blah, blah" and how cruel of Government to do this.

Always a difficult task to stand between money and a person's want plus pushing back against encouragement involving potential greed. Hands up those here who wish to give that a try.

 

[qldfrog]

a problem that appears to be getting worse

View attachment 207715

interesting subject actually, there is a very clear link between dental health and an individual health including heart disease risk and overall life expectancy.
i can add links if required but i trust it being common knowledge.
it is also a given here in Australia that medicare does not really cover dental treatment..your abcess and rotten teeth remedial treatment are from your pocket.
From the individual involved, it makes perfect sense to consider dental costs as a way to add life expectancy and old age health and confort.
That makes absolute sense to use your super for that..yes your super.
On the other side, from the government and super fund side, by preventing this dental health access to the poorer among us, this is a double win:
not only can you extract more fees and taxes and soon death duty, but the individuals will died much earlier statistically, reducing health cost and bringing forward taxes and duties, stamp duty on assets etc...
i expect a labour government to fight this super use ..if they do understand the above

 

[divs4ever]

Yes. No surprise there are practitioners encouraging people to access their superannuation for dental and cosmetic treatment. In addition, many consider it "their" money and combined with wanting to feel or look better.

Now if the Government in it's wisdom (?) decided to introduce legislation preventing access to superannuation for all these treatments except under extreme circumstance - which would be a loop hole which many would attempt to use - I would expect to hear strong objections from various quarters along the lines of "It is discriminating against people who require this work, is detrimental to their well-being and causing mental anguish, blah, blah, blah" and how cruel of Government to do this.

Always a difficult task to stand between money and a person's want plus pushing back against encouragement involving potential greed. Hands up those here who wish to give that a try.

well it is 'their money ' and the government would like it invested in less than true investment-grade projects , so who has the higher moral ground here

now dental work is probably fair ( surely 'whitening' isn't expensive enough to tap the super )

maybe needed dental work would earn you that promotion ( or better job elsewhere ) and might be a superior mid-term investment

 

[Bellcose]

The above two posts have, maybe unknowingly, supported my contention in Post #3381.

 

[divs4ever]

well super is supposed to be investing in your personal future and retirement , if prudent spending now improves your retirement and earning capacity until retirement .. that is an interesting argument

 

[qldfrog]

The above two posts have, maybe unknowingly, supported my contention in Post #3381.

but we also point that, in the aim of ensuring a better and independent retirement, dental expenses could be seen as a very worthwhile investment
and yes, investment.

 

[divs4ever]

obviously each future retiree will need to carefully assess the best use of such funds to help ensure a comfortable retirement

such as one suggested initiative of letting folks to use their super to enter a home mortgage

 

[sptrawler]

The corporate regulator has raised the prospect of limiting what superannuation can be invested in and putting restrictions on retail investments in high-risk funds, as it warned a whole-of-ecosystem response is needed to counter industrial-scale misconduct in financial services.

Speaking at a Financial Services Council event in Sydney on Wednesday, ASIC chair Joe Longo took aim at super trustees and advice licensees for their part in the Shield Master Fund and First Guardian Master Fund collapses but also pointed to the extremely low bar for registering managed investment schemes.

“In our view, if you’re a superannuation trustee, you must undertake sufficient due diligence of new investment options before you make them available to investors…you are expected to check that the product is fit for purpose,” Mr Longo said.

“The same goes for advice licensees. There’s a reason why we are focusing on the role of licensees in our enforcement work – you are the first line of defence here. You must have strong quality controls for your approved product lists."
.

Just another example of mixed messages, on the one hand be careful what you invest super in, then on the other.

Chalmers directs Future Fund to invest in housing and renewables

The treasurer has directed the country’s sovereign wealth fund to prioritise investments in housing, renewable energy and infrastructure.

www.afr.com

Treasurer Jim Chalmers has directed the Future Fund to prioritise investments in housing, renewable energy and infrastructure, putting his stamp on the sovereign wealth account but opening Labor to criticism that it is politicising the $230 billion fund.

Issuing the first statement of expectations for the independently managed fund in 15 years and a new investment mandate, Dr Chalmers and Finance Minister Katy Gallagher insisted that the changes would not come at the expense of its performance

 

[qldfrog]

Just another example of mixed messages, on the one hand be careful what you invest super in, then on the other.

Chalmers directs Future Fund to invest in housing and renewables

The treasurer has directed the country’s sovereign wealth fund to prioritise investments in housing, renewable energy and infrastructure.

www.afr.com

Treasurer Jim Chalmers has directed the Future Fund to prioritise investments in housing, renewable energy and infrastructure, putting his stamp on the sovereign wealth account but opening Labor to criticism that it is politicising the $230 billion fund.

Issuing the first statement of expectations for the independently managed fund in 15 years and a new investment mandate, Dr Chalmers and Finance Minister Katy Gallagher insisted that the changes would not come at the expense of its performance

changes would not come at the expense of its performance:
how can anyone says such BS?
if your priority is performance, then whatever comes top is chosen, once you put investment sector priorities, yes you will affect performances

 

[StockyGuy]

changes would not come at the expense of its performance:
how can anyone says such BS?
if your priority is performance, then whatever comes top is chosen, once you put investment sector priorities, yes you will affect performances

Hmmm Mr Trawler's link is to an article from Nov 20, 2024. The Future Fund is not superannuation and has a wider mandate than maximising shareholder returns - its website says "Our purpose is to invest for the benefit of future generations of Australians. " But yes it makes me nervous when ALP career politicians determine what is in the interest of these future generations.

HOWEVER there was discussion at the recent economic roundtable about possible super fund performance test changes that would make investing in certain types of infrastructure projects easier. But these options don't seem popular because, like you say, maximising super returns IS THE priority there. If they made the changes then some would likely just be investors in these projects due to their innate apathy to change from the default settings of their funds.

 

[sptrawler]

Hmmm Mr Trawler's link is to an article from Nov 20, 2024. The Future Fund is not superannuation and has a wider mandate than maximising shareholder returns - its website says "Our purpose is to invest for the benefit of future generations of Australians. " But yes it makes me nervous when ALP career politicians determine what is in the interest of these future generations.

HOWEVER there was discussion at the recent economic roundtable about possible super fund performance test changes that would make investing in certain types of infrastructure projects easier. But these options don't seem popular because, like you say, maximising super returns IS THE priority there. If they made the changes then some would likely just be investors in these projects due to their innate apathy to change from the default settings of their funds.

Absolutely, but the situation of mixed messages is still present IMO, from my link most of the Government investment priorities for the future fund are Government initiatives ( housing, renewable energy and infrastructure) also as you say the head of the fund could be seen as being sympathetic to the Government agenda.

So is it a bridge too far to think that the fund may put Government directives, above member outcomes, as the Future was (from memory) implemented to mitigate the Public Service employees pension costs?

My post was to show that a mixed message may be perceived, where a Govt body ASIC on one hand demands due diligence, when making investment choices, or making/taking investment advice, as per @Dona Ferentes post that I was responding to.
Quote:
“In our view, if you’re a superannuation trustee, you must undertake sufficient due diligence of new investment options before you make them available to investors…you are expected to check that the product is fit for purpose,” Mr Longo said.

“The same goes for advice licensees. There’s a reason why we are focusing on the role of licensees in our enforcement work – you are the first line of defence here. You must have strong quality controls for your approved product lists."

Then other hand, the Government seems to be giving a perceived Govt super fund, prioritised investment directives.
The Future Fund may well not be a Super Fund, but there may be a general public perception that it is a super fund, maybe that should be made more clear to the public.
It is just one of those 'grey areas,' like the perception people have thinking their super, is their money.
Maybe it would be better just to put the Future Fund back into consolidated revenue?

 

[divs4ever]

The Future Fund may well not be a Super Fund, but there may be a general public perception that it is a super fund, maybe that should be made more clear to the public.

also often used as a guide to where actual super funds should look more closely ( and perhaps bias their funds towards )

the ' proverbial good example ' .

 

[divs4ever]

changes would not come at the expense of its performance:
how can anyone says such BS?
if your priority is performance, then whatever comes top is chosen, once you put investment sector priorities, yes you will affect performances

and this is despite previous concerns expressed by Peter Costello , already trying to restrict fund draw-downs to maintain it's viability ( after all it is basically the proceeds from the Telstra float plus income received from investments since )

unless the Government is planning to 'float' ( or sell ) another 'government asset ' ( well tax-payer funded asset ) say National Rail or the NBN there is no new influx of cash coming in to invest in 'these new priorities '

 

[houtman]

Hmmm Mr Trawler's link is to an article from Nov 20, 2024. The Future Fund is not superannuation and has a wider mandate than maximising shareholder returns - its website says "Our purpose is to invest for the benefit of future generations of Australians. " But yes it makes me nervous when ALP career politicians determine what is in the interest of these future generations.

That's right, as the treasurer announced on 19th Nov 2024 the "Future Fund Investment Mandate Direction 2024."

The 2024 mandate required the Future Fund Board to consider national priorities, which the 2024 mandate lists as
- Supporting the energy transition
-Increasing the supply of residential housing
-Delivering improved infrastructure

The benchmark target return remained unchanged at CPI plus 4.0% to 5.0% per annum.

as the Future was (from memory) implemented to mitigate the Public Service employees pension costs?

It was and still is, got starting funds from T3 ($19B) and budget surpluses ($40B 2005-08). Nothing added since.
Probably Costello's greatest achievement looking back.

The FF looks to have averaged over 5% pa above CPI since inception(2006).

Leaving well enough alone would have been my preferred option.

 

[farmerge]

That's right, as the treasurer announced on 19th Nov 2024 the "Future Fund Investment Mandate Direction 2024."

The 2024 mandate required the Future Fund Board to consider national priorities, which the 2024 mandate lists as
- Supporting the energy transition
-Increasing the supply of residential housing
-Delivering improved infrastructure

The benchmark target return remained unchanged at CPI plus 4.0% to 5.0% per annum.


It was and still is, got starting funds from T3 ($19B) and budget surpluses ($40B 2005-08). Nothing added since.
Probably Costello's greatest achievement looking back.

The FF looks to have averaged over 5% pa above CPI since inception(2006).

Leaving well enough alone would have been my preferred option.

Since when could a politician, any politician be trusted with money.
Their mantra is and always has been spend, spend, and spend even more.