What the Government Wants to do With Your Super

By Jason Fittler

Your superannuation has one purpose, to fund your retirement.

In fact there are rules governing what your superannuation can invest in. These rules are in place because superannuation is given concessions tax treatment.

In broad terms, your super fund is taxed at a rate of 15% while in accumulation mode and is tax free in Pension mode. To make sure that these tax benefits are not exploited there are rules around what you can invest in. The core rule is the Sole Purpose test.

“This is the central rule applying to all regulated superannuation funds. Under the test, funds must be maintained for the sole or core purpose of providing retirement benefits to members or death benefits to their dependants or deceased estate in the event of death.”

In the recent budget there were a number of changes to what assets super funds could no longer invest in as they did not comply with the sole purpose test. This is mostly to do with collectables. They also slipped in a change to superannuation rules which allow super funds to invest in infrastructure projects. Wayne Swan was quoted in the Financial Review as follows;

“What I have been concentrating on is trying to get the superannuation funds to invest more in domestic infrastructure because they have a particular fixation with investing in shares”

This means that your superannuation fund can now invest in infrastructure project for the Government, your super will now be used to rebuild public infrastructure, keeping in mind that there is $1.4 Trillion dollars in super in Australia and we have a government who is committed to returning the country to surplus by 2013.

The simple facts are as follows:

1.     The governments are going to tap into industry super funds to finance infrastructure in Australia.

2.     These type of investments carry large up front losses, if you are retired or looking to retire in the short term this will affect your pension payments.

3.     Industry super does not provide detail of their investments so you will never know.

4.     If you want to invest in infrastructure there are plenty of listed companies which provide you long term secure exposure.

This has been coming for some time; it was back in 2009 when I first heard these issues raised. 

Now it is out in the open, your super is the only thing which will provide you with a quality of life you expect in retirement.

It is your responsibility to protect your super and yourself, now more than ever Self managed Super Funds are truly the best way to protect yourself.

This is why Self Managed Super Funds are the fastest growing super product in the market place.

If you would like to discuss whether a Self Managed Super Fund would suit you give us a call today and make an appointment. I will only cost you your time.

Click to download a scanned copy of the financial review article.

Do you have any questions on the above?

Please give me a call I am happy to discuss.  Call (07) 4771 4577.