Latest news with #Mousina
Yahoo
12-05-2025
- Business
- Yahoo
Dangerous risk behind Gen Z's $3 million superannuation win: 'Think again'
Young Aussies are expected to retire with more than $3 million in their superannuation accounts. That's even if they only ever earn an average wage, new modelling has found. From July 1, Labor plans to increase the tax on the earnings of super balances above $3 million from 15 per cent to 30 per cent. This would impact about 80,000 super account holders, or 0.5 per cent of the total population. But the $3 million mark could be the norm in the future, according to new analysis by AMP Capital deputy chief economist Diana Mousina. She found that at least half of Gen Z would hit the mark by the time they near retirement in about 40 years due to wage inflation and compound interest. RELATED Australians urged to claim $17.8 billion in lost superannuation after ATO pays out $502 million $6 million cost Coles and Woolworths pay that Aldi refuses to cave on Property mogul reveals $200,000 error cashing in on 'untapped' goldmine 'Do you think that the proposed $3 million superannuation cap tax won't impact you because the Labor government said it only impacts 0.5 per cent of people now? Think again!' she said. 'An average 22-year-old today earning average wages for the rest of their life will breach the $3 million limit unless the government indexes the threshold. 'This is also not taking into account any additional contributions into super and forward estimates for returns are also conservative.'The modelling assumes full-time earnings of $98,000 from age 22, with 3 per cent wage growth, super returns net of fees and taxes, and the super guarantee rate remaining at 12 per cent. If the person were to work until they were 67, they would have $3.6 million in superannuation. Under the current rules, they would attract about $24,000 in tax a year. If the tax rules are changed with the $3 million threshold, they would pay an extra $5,400 a year and $29,300 total tax. Mousina said she was not 'necessarily against' the policy but argued it didn't make sense not to index the brackets. Mintwell financial adviser Josef Jindra told Yahoo Finance the absence of indexation was "concerning", with the $3 million threshold not currently linked to inflation or wage growth. "Over the coming decades, its real value will steadily erode," he said. "Without regular adjustments, this cap will gradually pull more and more Australians into a higher tax bracket—not because they are extraordinarily wealthy, but because they've done the right thing: contributed consistently and let their super grow over time." There is currently a 15 per cent tax on superannuation fund earnings during the accumulation phase, which is when you are still working and contributing money to your fund. The government has proposed increasing the tax rate to 30 per cent for accounts with $3 million or more during the accumulation phase. Treasurer Jim Chalmers said he did not intend to index the threshold when the plan was first announced back in 2023. The Greens have called for the threshold to be lowered to $2 million and for this to be indexed in line with inflation. Financial Services Council data released when the policy was first announced found 500,000 taxpayers would breach the cap in their lives, including 204,000 Aussies under the age of 30, if the cap is not indexed. The superannuation change is expected to start on July 1, however, it has not yet been passed by parliament. Other changes due to kick in on July 1 include an increase to the super guarantee rate from 11.5 to 12 per cent. This is the final legislated increase. Superannuation will also start being paid on Parental Leave Pay. This means parents getting the government support will get an extra 12 per cent of their payment as a contribution to their super fund. The transfer balance cap, which limits the amount of super that can be transferred into the retirement phase, will increase by $100,000 from $1.9 million to $2 while retrieving data Sign in to access your portfolio Error while retrieving data
Sky News AU
08-05-2025
- Business
- Sky News AU
Leading fund manager Geoff Wilson urges Labor to consider Greens' super tax proposal, calls for indexing above inflation
A leading fund manager has urged Labor to consider the Greens' call to index tax on super accounts, but stressed this must match investment growth to ensure young Australians are not disadvantaged by retirement time. Labor's plan to double the tax rate on funds in super accounts above $3m without indexations over time, alongside taxing unrealised capital gains, is back on the cards, as a new Senate make-up will likely allow Labor to guarantee legislation passes with only the Greens' support. The Greens want Labor to lower this threshold to $2m, but support indexing it over time to match the rate of inflation. Leading fund manager and Wilson Asset Management founder Geoff Wilson supports the Greens' call, but wants the threshold indexed well above the rate of inflation. 'With the Greens indexing it to the CPI (consumer price index), the risk there is young people are going to be significantly disadvantaged again because superannuation (is something) you effectively invest in assets,' Mr Wilson told 'What it would make sense for them to be looking at is growth in asset prices, which runs at probably double, if not more, than the CPI growth. 'If you want young people not to be disadvantaged, that's what you need to do.' He noted the growth in house prices and equities is about 8-10 per cent per annum, while inflation grows at about 2-3 per cent, and said the threshold was less important than how it was indexed. 'In terms of the quantum, whether it's $2m, $3m or $4m, that's not the biggest thing,' Mr Wilson said. 'I don't think anyone's concerned about paying a higher tax rate as long as it's fair and the problem with this legislation is it's unfair because it's not indexed and it's not indexed to the right measure.' Mr Wilson's call comes as new analysis of Labor's plan showed a 22-year-old earning average income their whole life would breach the $3m cap before retirement. Treasurer Jim Chalmers' had claimed the change would only impact 0.5 per cent of Aussies, or 80,000 households, when revealing the policy in 2023. AMP's deputy chief economist Diana Mousina took to LinkedIn with a diagram showing how an Aussie on the average full-time wage, with three per cent annual wages growth and the 12 per cent super guarantee, would breach the threshold by age 62. She also told Sky News her diagram may have even underestimated how quickly the 22-year-old's super account would hit $3m. 'What people are forgetting is that average super returns have been about nine per cent in Australia in the last 30 to 40 years and I'm using assumptions closer to six per cent,' Ms Mousina told AM Agenda. She also echoed Mr Wilson's point, arguing the Greens' plan to index taxation was better for younger Australians than Labor's proposal at a higher threshold. 'For someone who has a super balance right now of $2m, it's not a great policy for them because they have to pay a higher rate of tax,' Ms Mousina said. 'It depends what age you are and how much you've got in your super at this current point in time and then into the future. 'But it's just worthwhile to do the numbers yourself and think about how much actually are you going to have in your super.' Labor has attempted to get the super tax legislation through the Senate multiple times, at one point trying to link it with a bill which would have scrapped debit card surcharges and reduce surcharges on credit cards. However, it was still opposed by Senators David Pocock and Jacqui Lambie, who joined forces with the Coalition to defeat the proposals. Prime Minister Anthony Albanese, before Labor's sweeping victory over the weekend, ruled out doing a deal with the Greens to lower the threshold. Labor's super tax plan also drew intense backlash as it would mandate Australians pay taxes for gains on assets - such as farms and properties – above a $3m threshold in their super funds, even if they had not realised the return from those assets. Mr Wilson said this would impact the 'lifeblood of Australia' as people would restructure their investments away from risk. He also warned it could 'destroy innovation' and entrepreneurialism as a large amount of investment into technology start-ups comes from self-managed super funds.
Sky News AU
08-05-2025
- Business
- Sky News AU
Labor's super tax forecast to hit average 22-year-olds as government clears path for legislation after election victory
The Albanese government's super tax has been branded 'shameless economic theft' after modelling revealed it will impact the average 22-year-old by the time they retire. The Labor Party promised no changes to superannuation at the 2022 election but has since reneged and attempted to pass legislation doubling tax on big super balances. The proposal to impose a 30 per cent tax on funds above $3 million now faces no barriers as Labor has been projected to secure a significant majority in the lower house, while only needing the Greens to pass legislation in the Senate. Proposed legislation will also introduce a tax on unrealised capital gains above the same threshold. While the government insists the change affects only the top 0.5 per cent of accounts, modelling from AMP Deputy Chief Economist Diana Mousina suggests otherwise. 'An average 22-year-old today, who's earning average full-time earnings, will hit the cap when they get to about 62 years old on my analysis,' Ms Mousina told Sky News. 'So that's before they actually reach retirement.' She warned the government's failure to index the $3 million cap means growing numbers of Australians will eventually be drawn into the tax net. 'My estimates were actually, I think, understating the amount of people that will hit the cap because I used quite low return assumptions,' Ms Mousina said. She also flagged broader economic distortions that may result from the policy as people try to find a way around the taxes. 'If people know that their super is going to be hit, then inheritances will go elsewhere,' she said. 'More people will probably go to purchase a home, which has implications for home prices in the future. 'So people will find a way around this system to try and reduce their taxable income as much as possible.' As the Albanese government prepares to forge ahead with passing the legislation, Liberal Senator Andrew Bragg told Sky News it was 'economic theft'. 'The government says this new tax will only apply to 0.5 per cent of individuals with a superannuation account, but importantly, Labor has not indexed it,' he said. '80,000 Australians will have a new tax on their retirement introduced immediately, but as younger Australians earn more, there is no doubt they will be caught up in this shameless act of economic theft. 'In time, it will hit at least 2 million more Australians. But that's been (Treasurer) Jim Chalmers' plan all along.' Prime Minister Anthony Albanese has refused to back down amid mounting pressure to amend the policy—to exclude unrealised gains and include indexation. 'We have our policy. We've had legislation. It's been before the parliament,' he said before the election, when the policy was held up in the upper house. "It will affect - importantly - 0.5 per cent of the superannuation population. That's all. And it won't mean they don't get concessions. 'It will just mean the concession isn't as large. That's our policy.'
Sky News AU
07-05-2025
- Business
- Sky News AU
Labor's big spending prolonging cost of living woes for vulnerable Aussies by fuelling inflation, AMP's Diana Mousina warns
Labor's "perverse" big spending has prolonged post-pandemic inflation and impacted Australia's most vulnerable, a leading economist has warned after fresh data revealed struggling Aussies were experiencing higher price increases. The Australian Bureau of Statistics on Wednesday released its selected living cost indexes, which measures prices changes for different household types and how it impacts them. It revealed prices for pensioners and beneficiaries (up 1.6 per cent), aged pensioners (up 1.5 per cent) and those receiving other government payments (1.6 per cent) all rose significantly during the March quarter. The increase was just 0.6 per cent for self-funded retirees while employees experienced a 1.1 per cent jump in prices over the three-month period. A major factor contributing to the increase for pensioners and others receiving government payments was health costs - up between 6.9 and 9.5 per cent for these household types. This was due to a smaller proportion of households receiving subsidies under the Medicare Safety Net and Pharmaceutical Benefits Scheme. The price rises for the most vulnerable was a concern for AMP's deputy chief economist Diana Mousina who noted how Labor's big spending policies, which were aimed at tackling the cost of living crisis, could prolong post-pandemic inflation and hurt Aussies in their hip pockets. 'It's sort of a bit perverse in a way because we've had a cost-of-living challenge because of high inflation predominantly,' Ms Mousina told 'If you just keep on giving more money back to households you run the risk of creating an additional cost of living problem because people feel like they're cashed up again more and they can go and spend that money. 'So, the government needs to be careful, they can't just continually give people money back. That's not the right strategy to actually help with the cost-of-living environment.' Alongside health price rises, electricity also soared for all household types as most households in Brisbane had used up the $1,000 Queensland State Government rebate. Some households were slugged with higher electricity bills during the March quarter due to the timing of 2024-25 Commonwealth Energy Bill Relief Fund rebates. Ms Mousina argued Labor's large government spending, which has reached a several decade long high excluding the pandemic, could have an adverse long-term impact on these Aussies who are now slugged with higher prices after government subsidies phase out. 'If you look at what's happened in the last year and a half, could inflation have been lower if the government didn't spend so much? I think probably yes,' Ms Mousina said. 'We don't know to what extent. But if we just basically look at the change in government spending over the past two years, we can see that it's continually been raised up.' She also acknowledged the Albanese Government's cost of living subsidies have helped vulnerable Australians struggling with the cost increases in the short-term, but noted there were downsides when it came to the big picture. 'It's not like it's been adverse to the most vulnerable groups. It has, of course, helped those groups,' Ms Mousina said. 'But when we're talking about the macro picture, the overall level of government spending, has not helped the inflation problem.' While Ms Mousina warned about Labor's big spending prolonging inflation, the Australian Council of Social Service's CEO Cassandra Goldie called for better incomes those receiving support in the face of high medicine costs. "While governments must ensure that our health system is properly funded so people can get the care they need, including medications, it is also critical for the government to recognise that people need an adequate income to cover these and other expenses," Ms Goldie told "We know that people on the lowest incomes – people receiving income support – often go without essential healthcare and medication because they cannot afford it." She called on the Federal Government to hike incomes for people receiving government support to "have enough to cover basic costs". "Income support payments must be lifted to at least $82 a day, and supplementary payments must be in place that recognise the cost of chronic ill health, disability and other circumstances people face,' Ms Goldie said.
