What is Superannuation For?
In our free society the concept that we are masters of our own destiny, and in particular able to do whatever we like with our own property, possessions and, above all money, sounds like a good idea but reality closes in.
I believe that Australia has the best retirement financing system in the world, namely our superannuation system. (I don’t include the super generous parliamentary retirement handouts in that arena).
The super system has evolved with very generous tax breaks but as successive treasurers have pointed out, the primary purpose of superannuation is to look after retirees and NOT to allow them to build remarkably generous tax advantaged wealth for their children.
At age 85 retirees are OBLIGED to withdraw 9% of their super nest egg from their super fund. Some funds earn 9% but a lot do not and therefore the tax advantaged nest egg shrinks. The shrinkage expands to 11% at age 90 and reaches a whopping 14% at 95.
What a pity that so many of those 14% incomes around the country are spent on nursing homes and not champagne and caviar in First Class on a Qantas around the world holiday.