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Coalition's super plans advantage middle australia



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Richard Alston iberal Senator for Victoria;· C U 1C U A A 1 IV/ 1 v iw V r l< SHADOW MINISTER FOR SOCIAL SECURITY, CHILD CARE AND RETIREMENT INCOMES

NEWS RELEASE COALITION'S SUPER PLANS ADVANTAGE MIDDLE AUSTRALIA

The Deputy Federal President of the Association of Superannuation Funds of Australia (ASFA), Mr Ken Lockery, was today reported as saying that the Coalition's superannuation policy "looks significantly less attractive, not only to the highly paid but also to middle Australia".

This is quite untrue and indeed Mr Lockery has acknowledged to me this afternoon that his remarks were confined to high Income earners, an approach for which the Coalition makes no apologies.

The story also Implied that Mr Lockery was critical of the Coalition's decision to clamp down on double dipping by the imposition of a ceiling on lump sums and an increase in the preservation age. Again the report is Incorrect as Mr Lockery has been on the public record for more than 12 months in support of these measures.

The decision on lump sums was taken by the Coalition for two very sound reasons:

- to change the lump sum mentality whereby people can take their concessionally taxed lump sums, dissipate them and then apply for the age pension. In other words our approach is the first real attempt to properly integrate superannuation with social security, while still allowing individuals access to generous lump sum arrangements

- to strongly encourage the taking of more flexible annuities in retirement and to offer real savings alternatives to ordinary Australians

The great bulk of average Australians will benefit from the Coalition's superannuation proposals. With the abolition of lump sum taxes and a more generous rebate system as can be seen from the attached table, middle Australia - those on incomes between $30,000 and $50,000 - will be significantly better off under the Coalition’s proposals.

For example someone on $40,000 a year In a typical employer/employee scheme will be nearly $85,000 better off in end benefits by comparison with Labors existing arrangements.

This Is hardly hitting middle Australia.

It is true, of course, that many very high income earners who have had massive tax concessions available to them under Labors current system will be worse off. However in attempting to genuinely devise an equitable and fair superannuation system for all Australians this is inevitable.

The Coalition's superannuation policy is based squarely on equity, simplicity and fairness - three principles totally missing from Labors approach.

For further information contact Senator Richard Alston on [03] 890 5177 or 817 1675 (ah) 22 November 1991

ENQUIRIES: Melbourne 03 - 622521 C O M M O N W E A L T H

Canberra 062 - 727764 P A R L IA M E N T A R Y L IB R A R Y

M I C A H

A TYPICAL EMPLOYER SPONSORED SCHEME WITH 8% EMPLOYER AND 4% EMPLOYEE CONTRIBUTION RATES

Income Contributions

Value of 25% tax Rebate to member

Effective Tax on Employer Contributions *

End Benefit A fte r 30 years

Employee E m ployer Coalition Labor Coalition Labor Coalition Labor

10,000 400 800 170 100 nil 96 175,828 174,846

20,000 800 1000 240 200 n il 192 351,656 333,068

30,000 1200 2400 300 - 120 288 491,722 434,876

40,000 1600 3200 400 - 160 384 655,629 570,881

50,000 2000 4000 500 · 200 480 798,620 708,886

**100,000 8000 - - 1780 960 1,295,539 1,386,913

Assumes effective tax on contributions of 12 per cent taking account of deductions for administrative expenses and death and disability cover.

Assumes employer contributes the full $8,000.