Dear Sir/Madam.

The article “Government does not help the rich get richer” AFR 18’th Aug.2010 page 33 should not go unchallenged.

Take retiree: 1)
Worked for 45 years and paid taxes, but did not accumulate enough assets to be completely independent of the age-pension. For every dollar of extra income for him and his wife above $6,500, the couple loses $0.50 of age pension, and if their income exceeds $45,000 per annum, the couple will pay tax of $0.315 in the dollar including medicare levy, leaving them with an income of $0.185 from every dollar extra income. For the defined benefit income a 10% tax-offset applies if paid from an Australian super fund, but not if the income comes from an overseas fund.

[b][b]Retiree 2)[/b][/b]
Has accumulated assets of $1.5million and the assets are in a so-called taxed Self Managed Super Fund. To be very conservative, the assets are in a term deposit earning 7.0% income of $122,500 per annum and even if the retiree is single, he/she will not pay a cent of tax.
Now if the assets are in fully franked shares, like banks and return $100,000 worth of franked dividends, he/she will again pay no tax on the dividend, and the government will send him/her a cheque of $30,000 for the franking credits.

Retiree 3)
Is an ex-politician or highly paid public servant, in receipt of a defined benefit pension of $100,000, on which he/she will have to pay tax, but he/she gets a 10% tax offset, which equals %10,000 after reaching retirement age, but before retiring, the public servant can establish a SMSF and contribute into it extra with tax concessions if the $25,000 total for under fifty and $50,000, if over fifty is not exceeded and in addition he/she can contribute $150,000 from after tax income, and the earnings from the SMSF will only attract 15% tax, and when the person reaches the age of 60 even the income will be completely tax-free from the SMSF.
Extract fromanother article
The figures are partly explained by market volatility, especially the huge losses during the initial stages of the global financial crisis, and by poor investment decisions on the part of superannuation funds managers. Just as importantly though, the risible returns are all that is left over once investment advisors and fund managers, including trade union bureaucrats, take their hefty slice. A staggering $A17 billion in fees—or $48 million per day—is siphoned off each year from workers’ savings. As the ABC pointed out, this sum alone would be sufficient to fund the entire Australian old age pension system. Yet none of the major parties—Labor, Liberal or the Greens—has commented on these extraordinary figures during the current election campaign, much less on the question of old age incomes more generally.

What Ken Henry should have recommended is, abolish all tax concessions for super, abolish the means test for the age pension so that even millionaires get the full pension, but then the retirees should pay the same tax as do the workers.

Yours truly
Mr.W.Hawil

Equitist, this was a letter to the editor of the AFR, and he made sure it did not get published, because the people have no idea what the politicians and media barons are up to.
I once read a letter from a reader to the editor, saying millionaires should not be paid the old-age pension, and as I found the name of the writer in the phone book, I took the liberty and rang her, when I told her that millionaires do not want the age pension, because the tax concessions are worth alot more, she was stunned, saying I never knew that.

hawil wrote on Aug 20^th, 2010 at 10:05pm:


Hawil, writing letters only to newspapers will get you nowhere.