EYE-BALL’s Guru on – Australia’s Parliamentary Remunerations – Part III – Superannuation – “The Future Fund”
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– 3rd Apr – Government not happy about its tax collect – Claims Tax Minimisation deserves ‘Naming and Shaming’ –
– 31st Mar – The Cyprus Bail-out –
– 31st Mar – Australia’s Debt – and the idiots Managing the Treasury –
– 20th Feb – Australia’s Parliamentary Remunerations – Part II – Entitlements and Allowances –
– 13th Feb – Australia’s Public Sector Remunerations Part I – Parliamentarians “Base-Salary” and “Additional” entitlements –
– 31st Jan – The Devil is in the Detail, there is none – Gillard chooses shock, awe & Spin over Policy –
– 23rd Jan – The Turmoil is Already here – We just have to accept what is coming –
– 22nd Jan – The Turmoil is beginning – Japan’s Economic Stimulus to tip the scales –
– 20th Jan – Wayne Swan Tips his hat at New Yorker’s –
– 10th Jan – The ANZ Whitehaven Hoax –
– 5th Jan 2013 – Financial ‘Ghosts’ from the Past – Hawke and Keating v Gillard and Swan –
– 29th Dec – The Great Big Financial Swindle – Part II – The ‘Budget Surplus’ Backflip – Swan tells his own Porkies …
– 22nd Dec – The Great Big Financial Swindle – Part 1 – The ‘Budget Surplus’ Backflip – Swan serves up Senator Wong
– 14th Dec – The Walls are crumbling – Government admits High A$ policy is hurting –
– 4th Dec – Retailers and bureaucrats don’t understand – high A$ value responsible for off-shore purchases –
– 19th Nov – Government Expenditures Part I – Department of Prime Minister and Cabinet – DPMC – STAFFING –
– 3rd Nov – Shareholders – Holding back the world – scared money – scared boss’s –
To see more GURU posts: – click here …
– Australia’s Parliamentary Remunerations –
– Part III – Superannuation – The Future Fund –
| Author: EYE-BALL Guru | 4th Apr 2013 |
|Continuing the Series – Australia’s Parliamentary Remunerations:
For a long time there has been a desire to dissect and examine the Parliamentary remunerations structure, and the perks attached to being a ‘Member of Parliament, and a Senator – in Federal and at State levels.
Superannuation – ‘The Future Fund’:
Some interesting data has come forth from a long-term research investigation into Superannuation and in particular, the ‘Future Fund’, and other Public Service Superannuation Funds, namely Federal, State, and municipal.
Before we go to the ‘Future Fund’ – I want to put the macro jigsaw puzzle in play and how this research is endeavoring to put the pieces of that puzzle and how it relates to the Australian Public Sector Superannuation landscape.
A well respected Financial Markets source in Robert Gottliebsen wrote an article in the ‘Business Speculator‘ published in Oct’ 2012. The story provides commentary about the total ‘$’ value liability of Australia’s ‘unfunded’ Public Sector Superannuation schemes.
Mr Gottliebsen’s numbers paint a frightening landscape for Australian taxpayers whose task it will be to donate the revenues to provide for these future liabilities – i.e. Parliamentarians and other Public Servants retirement pensions. His story appears below:
Yip-pity-doh-dah-day – are you now sufficiently engaged and understand how much you and every other Australian owes to our illustrious Political Leaders … $210 billion … maybe up to $250 billion by now … divide that by the 14 million eligible voters and it equates to $18,000 – yes that is right … $18,000 smackaroos is how much each one of us eligible voters owes our MP’s, Senator’s and other leeches feeding of the Federal Superannuation system.
This is the mother of all ‘Ponzi’ schemes. It makes all others pale into significance … Madoff’s efforts were kindergarten stuff and they jail him forever …
The meaning of a ‘Ponzi’ scheme in the true sense of the word – ‘the future liabilities for present day entitlements’, and how does the Parliamentary Superannuation not fit this meaning. All MP’s and their superannuation like entitlements are to be paid for by future taxes stripped from future taxpayers to pay for decade old superannuation schemes, as legislated and voted for by these same MP’s who are to benefit from the scheme.
You – the taxpayer already donated $60+ billion to the Future Fund in 2006-07 when Treasurer Costello handed over Telstra shares and sale proceeds, and again in 2008 under Treasurer Swan when more Telstra shares were handed over.
Before these payments were made to the newly formed ‘Future Fund’, the previous superannuation entity only had $123 million in assets to cover the $91 billion liability – hence the ‘Ponzi’ scheme analogy.
A statement made in the 2005-06 ‘Future Fund’ Annual report allows speculation and opinion that up until 2005-06 – the Federal Government had not been funding is future superannuation obligations. This in a corporate sense would have been pursued by regulators as criminal intent and a breech of employer employee guarantees.
That ‘Future Fund’ statement appears in highlight below:
Very interesting indeed – the comment – ‘has never fully funded‘ – I would ask why The Federal Government would not cover its obligations in funding the Superannuation liabilities of all those covered under the Parliamentary Superannuation schemes – up until Costello and Swan stripped taxpayer owned assets/funds to do so in 2006-08..
Who is a member of the Future Fund:
Superannuation Schemes for Federal employees from the Site index above are listed below:
The Fed’s have a superannuation deal where the taxpayers pay 15.4% of their salary as a superannuation entitlement. Whether this includes the 9% employer contribution is still a question not answered. If it is – that means a 6.4% super windfall that no Australian workers can count on. Why not … that is one of my questions – with many more to come.
For information purposes to help with what follows –
Linked here is a Government website offering an indexed Superannuation Site map.
The 15.4% employer funded [Unfunded scheme] is by far the best Superannuation scheme in Australia. Why?
Early Access to Superannuation Entitlements:
How do politicians get the nerve to vote themselves such a generous pension scheme, allowing themselves full pension access from whenever they leave parliament regardless of age. The debate is of course about when an MP is voted out and has to re-establish a career and needs seed capital – you tell me how the public differ when loss of career happens through natural market place events, and often caused by Government policy.
Why are they denied superannuation entitlement access yet parliamentarians are?
It was reported in a news story that Treasurer Swan would need a private Superannuation scheme with a $5.6 million balance for him to be able to draw his $166k per annum pension. Because he is a Federal politician he does not have to contribute a cent to earn his Parliamentary pension. Does anyone think that fair? [See story link here.]
A further story on Gillard’s pension entitlements can be read here … this really will blow your mind in how much the MP’s superannuation is costing the Australian public.
Pre 1992 Superannuation:
Before 1992 – a great number of employers made tax deductible superannuation contributions to their employees as superannuation contributions. Post 1992 the 3% Superannuation levee was introduced – i.e. award wage increase decisions were used as superannuation contributions as opposed to salary increases.
Laws on underfunded superannuation payments:
The laws pertaining to under-funding employee superannuation entitlements in the Private sector are quite specific.
Determining what component of the ‘Future Fund’s’ under-funding is a result of the employer employee contribution, and/or the penalty component as reference above is an impossibility.
A story published with detail about the Future Funds’s obligations had this to say:
This comment suggests the Future Fund is still some $56 billion short of funding the total obligations of the Public service superannuation entitlements.
In an extract from the 2011-12 Annual Report background the following is claimed: [Page 11 of Report.]
Again referring to Robert Gottliebsen report above – his report of a $91 billion ‘Future Fund’ shortfall refers to the gap from the start balance of the transferred funds to the Future Fund in 2005-6 of less that $200 million, and the outstanding liabilities.
In the first year of the ‘Future Fund’s‘ operations the Federal Government handed over $18 billion in May 2006, the June 2006 balance date showed total assets of $18.163 billion.
Another $22.2 billion in cash was transferred in 2007, along with 8.1 billion Telstra shares worth $8.9 billion. In 2008, another $10.9 billion in cash, and 57 million Telstra shares worth $309 million was transferred from the Federal Government. This made the total Federal Governments cash contribution a total of $51.3 billion – and the share value of the Telstra stock valued at $9.209, totaling $60.509 billion of taxpayers funds was used to part fund the 2005-6 underfunded estimated of $91 billion.
There is irony here – politician’s voted themselves these very generous ‘unfunded’ superannuation schemes over time – they chose not to fund the scheme to its obligations on an ongoing basis, and then when a few Politicians get a little nervous they might miss out and their change of career entitlements – they legislate to strip taxpayer funds to cover the liability.
The Howard Government had control of both the Upper and Lower Houses, and this allowed them to push through this legislation. Was it an abuse of the political position the Howard Government was given? Some $60 billion of taxpayers fund used to provide retirement pensions for so few Federal Government employees.
Would it have happened if the Senate was not controlled by Howard at the time? Did it have bipartisan support?
There have been no more funds transferred to the ‘Future Fund’ since the 2008 transfers.
The 2005-06 establishment of the ‘Future Fund‘ was only about addressing the Federal $91 billion under-funded problem. The States and Local Government Superannuation form the balance of the $210 billion Gottliebsen talks about in his article above. [Note: The $91 billion is a Federal 2005-6 estimate – the 2007 $136 billion used in Gottliebsen article above is an unconfirmed number – as is the 2011 $210 billion number.]
Is this not frightening – some $210 billion – that is 80% of the total Government debt owed at the moment – the $210 billion could be as high as the current $265 billion Federal debt as no funds have been paid into the ‘Future Fund‘ since 2007.
If one was to add the Superannuation obligations to National debt – the current 25% Debt/GDP ratio that Wayne Swan and Treasury use as a reason to compare Australia favourably with the rest of the World, and a basis to justify more borrowing programs – suddenly looks less creditable.
Again – how did our State, Council, and Federal Leaders allow this taxpayer obligation to get so far behind? On whose watch did it start – and why does this liability not form part of the State and Federal Budget structures as a debt liability owed by all State and Federal taxpayers?
We’ve known for decades the ‘rich vein of gold’ – i.e. apathetic taxpayers our Politicians draw from to create their own ‘super-duper’ pension entitlements – has always been a contentious issue. Perhaps by not exposing the depth of the unfunded problem they felt they could hide it forever. Is it a case that the entitlements are just not sustainable?
Again – one of the claws that sticks is why are Parliamentarian’s allowed to trigger their pension payments when they leave the Parliament and not when they turn 55 or more?
Why do they only have to serve a minimum of 8 years if thrown out, or a minimum of 12 years to be eligible to receive a lifetime indexed pension linked to their remuneration at the time of their exit?
Available answers to questions like these are hard to find – or to find someone prepared to talk and answer questions like those being raised hereto.
This report shows some 67% of all investments are invested off-shore as at 30th June 2012. This investment strategy is wise if an expected fall in the A$ was imminent – the dividends off these off shore investments are subject to currency fluctuations and whilst the A$ remains high their value in A$ terms are neutral but driven by a higher rate of return that what is available in Australia.
I do find a conflict with the structure of the Future Fund – it has a targeted rate of return some 4.5-5% above the rate of inflation or around 8% as a benchmark. Investment has been driven off-shore to chase those types of returns.
This is the conflict – given the precarious Global Financial markets and the on-going GFC fallout – the risk attached to having 67% invested across Northern Hemisphere regions carries a risk greater that the shortfall in investment returns offered in Australia.
The other issue is that the Legislation provides no controls over how the investment portfolio is to be structured, either in a geographical nor ethical context – i.e. the Future Fund currently has a significant investment in American tobacco stocks. This at a time when the Government is wagering a war against the effects of tobacco on health costs across the Nation.
There is much at play here – the research has uncovered so many abnormalities and further research is ongoing. Part IV will get a little bit more into the individual MP’s entitlements to super and pension …
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The EYE-BALL Guru …