Latest news with #superannuation
The Guardian
a day ago
- Business
- The Guardian
A guide to greener banking: I divested my personal finances and you can too – here's how
What if your money was quietly fuelling the climate crisis – and you had no idea? If you bank with one of the big four or have retirement savings in superannuation, there's a good chance it is. In Australia, many major banks and most default super funds continue to invest in fossil fuel companies and their coal, oil and gas projects, driving global warming. That's where the global divestment movement comes in. Divestment means shifting your money out of harmful industries and into more ethical, climate-positive alternatives. It's the opposite of investment – you simply pull your capital out of companies or funds that contribute to environmental or social harm. Over the past few years, I've delved into divesting my personal finances and learned some key ways this shift can make a real difference. If you only tackle one area of divestment, make it your super – it's often your largest pool of money beyond property, and too often it's channelled into fossil fuels. The climate lobby group Market Forces estimates $150bn of Australians' retirement savings – roughly $6,200 per member account on average – could be tied up in 190 global companies driving the most climate damage. And such investment is growing, meaning our retirement savings are increasingly being used to create a more polluted world to retire into. One way to find a better option is to use the Market Forces comparison tool. It profiles more than 70 fund options, pinpointing just seven that fully exclude fossil fuels and the so-called 'Climate Wreckers Index' of the world's worst polluters. Using this type of information, I divested from a large Australian super fund which has known investments in fossil fuels and moved to a fund that excludes major polluters such as Woodside, Whitehaven Coal, Santos, Origin and AGL. Justin Medcalf, co-founder of Ethical Advisers' Co-op and Unless Financial, says to beware the 'devil in the detail'. For example, some funds use a tiered threshold screening, which may allow investment in companies earning limited amounts of their revenue from coal mining. 'A lot of investors assume that having a screening process in place means zero exposure to fossil fuels. It can be a rude surprise to discover there is still exposure,' Medcalf says. 'Ultimately, there is no perfect portfolio. For now, it's 'how do we create the best version of something that isn't perfect?'' All four of Australia's big banks – ANZ, Commonwealth Bank, NAB and Westpac – pour billions into fossil fuel projects each year, as do many other major players. In 2021, when searching for my first mortgage, I saw the chance to divest from a big four bank and switch to a more ethical option. I told my broker I wanted a home loan that was both competitive and backed by a bank that doesn't fund fossil fuels. We landed on one of the few with a cleaner track record. To find out where your bank stands, use Market Forces' Compare Banks tool. It includes a 'tell them to stop' button, so you can quickly send a message and easily demand change. That's crucial, says Medcalf. 'A lot of people move their money but don't say anything, so the bank never knows why. A key part of the divestment movement is communicating,' he says. And it works. Just last year, Commonwealth Bank broke ranks and announced it would stop financing fossil fuel companies that don't comply with Paris climate goals. 'That was quite a considerable win and a lot of that is attributed to the divestment movement,' Medcalf says. If you're investing in shares, ETFs or managed funds, beware of greenwashing. Many mainstream investment products – even those labelled 'sustainable' or 'balanced' – still include major polluters. Tools like the Responsible Investment Association of Australasia's certification and the Ethical Advisers' Co-op's Leaf rating can help you find investment products and services that meet high standards of environmental, social and ethical performance. 'We need a mindset shift,' Medcalf says. 'Rather than thinking 'what can I avoid?', think 'what can I actively invest in?' Yes, we want to avoid industries that aren't creating a positive future, but we can also get behind the industries of the future.' And divesting doesn't have to mean missing out financially – it may even boost your returns. RIAA's 2024 Benchmarking Report shows responsible investment funds have outperformed mainstream ones by 3% over 10 years, and 1.5% over five years. For long-term investors, especially those in their 30s and 40s, Medcalf says it makes sense to start factoring in environmental risk. Fossil fuel assets are increasingly seen as vulnerable, with tightening regulations and the growing risk of becoming 'stranded' and unprofitable. If you want to go a step further, consider strategically buying into a polluting company along with fellow shareholder activists who then band together to demand change from the inside. You can get started with as little as $500 using the Sustainable Investment Exchange (SIX) platform. Whether you divest, reinvest or become an activist shareholder, the point is the same: your money is powerful and you can actively choose whether it props up harmful industries or helps build a better future.
Daily Mail
a day ago
- Business
- Daily Mail
Insane amount of money baby boomer has in his self-managed superannuation fund - and how he did it
A software billionaire has a breathtaking $1.7billion in his superannuation fund - and he's set to be one of those hit hardest by Labor's new super tax. Charles Gibbon, 76, a director of software developer WiseTech, could be as one of Australia's most enthusiastic investors in self-managed super. His family's Fabemu No. 2 self-managed super fund has 15,594,630 shares in WiseTech - but will be thumped by Labor's new tax if it becomes law on July 1. If his stock rises 10 per cent during the next financial year, taking its price to $119.65, the value of the super fund would increase from $1.696billion to $1.866billion. Labor plan to bring in a new 15 per cent tax on unrealised gains - based on purely notional profits, not real ones - in super accounts with balances above $3million That $169.67million increase in value in Mr Gibbon's super fund would land him a tax bill of $25.4million just on those notional him selling a single share. The reclusive entrepreneur, originally from New Zealand 's South Island, has been a WiseTech board member since 2006. He made his eye-watering $2billion fortune as an early investor in WiseTech, founded in 1994. During the early days of the internet, the company started writing code for the freight industry. It is now the 21st biggest firm on the Australian Securities Exchange and a world leader in supply chain software. Mr Gibbon was instrumental in the success of the $36billion firm and stood by embattled WiseTech founder Richard White when others directors quit in February, following a string of revelations and allegations about White's lovelife. He splits his time between Sydney's eastern suburbs, where he lives in a Woollahra mansion with his wife Claire, and the NSW South Coast, where he has a six-hectare weekender at Bellawongarah, near Berry, and beachfront land at Gerringong. He grew up in Invercargill before studying a Bachelor of Science majoring in pure maths at the University of Otago and becoming a London-based stock analyst. Despite his wealth, he shuns the spotlight and rarely makes an appearance on Australia's glamorous social circuit for the well-heeled wealthy. Mr Gibbon joined The Australian Financial Review's elite billionaire Rich List in 2022 after his company's share price surged from $11.80 in March 2020 to $55.95. As of Thursday, WiseTech's share price had climbed to $108.77 - almost doubling in just three years despite some hiccups earlier this year during boardroom turmoil. The share price has catapaulted his super fund portfolio through the billion-dollar mark - and left him in the crosshairs for Labor's new super tax, which is aimed at the super rich. But experts warn the tax could have unintended consequences and punish budding start up companies before they have a chance to flourish like WiseTech did. Tax planning accountant Ben Johnston, a director of Johnston Advisory, predicts that tech start-ups would be worse off if the the new law comes into force on July 1. Wealthy self-managed super funds may be forced to sell-off assets to avoid paying the new tax on the notional unrealised gains, hampering the growth of young firms 'They rely on those big backers to have their investment in there to see them through the start-up phase,' he told Daily Mail Australia. 'If they start cashing out of them in response, to free up liquidity within their SMSF, that will potentially be an issue for start-ups.' Tax office data showed that of the start-ups with more than $50million in assets, 23.2 per cent invested in listed shares on the Australian Securities Exchange while 7.5 per cent had investments in unlisted entities, which can include start-ups that aren't on the share market. Australia was home to 616,941 self-managed super funds at the end of June last year. They had 1.142million members with multiple people allowed to be members. The Greens want the threshold reduced to $2million but indexed for inflation. Labor is proposing a $3million threshold that isn't indexed for inflation. Overall earning taxes would double to 30 per cent above this threshold, which includes the new 15 per cent tax on unrealised gains, based on the change in a total superannuation balance. The total headline tax take includes a 15 per cent tax on earnings over a financial year, including income from a self-managed super fund investment like a house that is being rented out, proceeds from an asset sale or appreciation in the value of an asset. Earnings would only be taxed at the accumulation but not the retirement phase of super when someone can access their superannuation at 60. The re-elected federal government now only needs the Greens to get its legislation through the Senate. But until that occurred, Mr Johnston said it was hard to give advice to clients about whether they had to sell high-performing assets to avoid Labor's proposed new tax. 'I'm just telling them to review their liquidity first and foremost because a lot of it's crystal ball,' he said. 'The problem with this too is the uncertainty - it's hard to truly respond to it because the taxes on the unrealised gain. 'If you're going to take really fundamental action around it, not knowing on what gain you may make; again you're assuming you are going to make a gain in the first place. 'To then go and sell property or shares in potentially profitable companies just for the sake of a potential tax problem down the track, it's also a big call and not necessarily the right one.' The problem would be more pronounced in self-managed super funds that have a higher concentration of assets like farms that were lucrative but harder to sell to have cash to pay a tax bill. 'If you've got a self-managed super fund with $10million in say real estate or in rural property or land or whatever, and you've got very limited cash reserves, you've got a real problem then,' Mr Johnston said. After new senators take their seats in July, Labor could pass the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill in 2023 after that date, with support from 11 Greens senators, and backdate it to July 1. Labor would no longer need the support of moderate, left-leaning crossbenchers like Jacqui Lambie or David Pocock, who have expressed concerns about taxing unrealised gains. Fabemu sold 1.5million shares for $200million in early December.
ABC News
3 days ago
- Business
- ABC News
Superannuation tax debate ramps up, Coalition's shadow ministry revealed
Welcome back to your weekly federal politics update, where Brett Worthington gets you up to speed on the happenings from Parliament House. There's been no shortage of "old man yells at cloud" feelings about the government's plans to increase the tax paid on superannuation balances above $3 million. The hysteria coming from some quarters, most noticeably two daily newspapers, makes it seem like it was a tax that was suddenly sprung on voters after an election. But this is far from a "there will be no carbon tax under the government I lead" moment. It's been more than two years since Treasurer Jim Chalmers stood in the prime minister's courtyard at Parliament House to announce a doubling of a tax rate. The plan was to legislate it but not have it come in for two years, noticeably after the 2025 election. Currently, the government charges 15 per cent tax on superannuation fund earnings, but only while you are still working and contributing money into it, known as the accumulation phase. The increase to a tax rate of 30 per cent will apply to accounts with $3 million or more during the accumulation phase. Treasury estimates around 80,000 people, or 0.5 per cent of super balances, would be hit with the higher tax bracket for every dollar above $3 million. When he announced the change, Chalmers said one account held more than $400 million in superannuation, a scheme originally designed for people to have a comfortable retirement. He said 17 people had more than $100 million in their account and while the average balance of accounts over $3 million was close to $6 million, the average super balance had just $150,000. Chalmers introduced the legislation into parliament in November 2023 and it passed the House of Representatives in October 2024 but Labor was unable to find the votes to pass it through the Senate before the election. Having just been delivered a whopping electoral victory, critics have been quick to hysterics that the government might actually do what it said it would do. The most contentious parts are that it isn't indexed (meaning the $3 million threshold won't increase with inflation) and that the plan to tax unrealised gains. There have been no shortage of claims about farmers having to sell their farms or property investors their places because they'll face having to pay tax on assets that have increased in value, even if its only on paper. Supporters of the tax change say the Chicken Little critics, carrying on as if the sky is falling in, are only behaving like that because they're wealthy individuals who'll have to pay more tax after having long benefited from concessional tax rates. Tax minimisation, or worse avoidance, is the reason so many of those assets — be it the farm or investment properties — were put into superannuation in the first place. Labor has faced no shortage of critics for lacking ambition in overhauling not just Australia's taxation system but the broader federal budget, which is heavily reliant on personal income tax. A failure to implement even the smallest of tax changes has some fearing it will all but kill off any broader ambition to overhaul how the government raises revenue. Covering the Coalition break up cum make up has been akin to writing recaps of Married at First Sight, except in the case of the Nationals more people watch the reality program than voted for the country party. Labor too revelled in the chaotic scenes coming from the Coalition, announcing a contentious gas project as the Liberal and Nationals leaders stepped up to announce their parties were getting back together. The off again, on again antics left no shortage of people wondering what it was all for. David Littleproud emerged with no shortage of dints in his leadership of the Nationals. Having not gained the extra cabinet seat he wanted, one of the only tangible thing that emerged from it was the sudden friendship from one-time rivals Barnaby Joyce and Michael McCormack. You know what they say about the enemy of your enemy, but we digress. Littleproud claimed he had opted for generational renewal in who he appointed to the frontbench. Joyce pulled out the the receipts, eager to point out just how many of the frontbenchers were older than him. Joyce also said Littleproud need not have rung in him to tell him he wasn't getting a job, telling the ABC he'd already read about it in the papers. More unorthodox was new Liberal leader Sussan Ley's decision to call every single member of her party. The blokes who preceded her usually just called the victors. Oh to have been on the call with Jane Hume, undoubtedly the biggest victim in the new-look opposition. The architect of the disastrous work from home policy, Hume received a call from Ley to learn she'd be working from the backbench, joining fellow former shadow cabinet members Sarah Henderson and Claire Chandler. An unhappy Henderson was quick to say high-profile women were being overlooked. Earlier in the week she'd derided former leader Peter Dutton for being too focused on cost of living in the campaign (others would argue that was the least of the disastrous campaign's problems). Female representation in the shadow cabinet has undoubtedly gone backwards since the last term. Ley pointed to the promotion of new women to the outer ministry as a sign of renewal coming through the ranks. "This is their first step, but it's far from their last," she said. Ley rewarded those who supported her bid for leadership, while also keeping senior conservatives in high profile roles, even if not in the job they were asking for. James Paterson made no secret of his desire to stay in a national security role but was moved to finance, replacing Hume, while Andrew Hastie, who wanted a social or economic portfolio, replaces Paterson at home affairs. Ley also appointed Tim Wilson and Giselle Kapterian to roles despite recounts playing out in their seats. "Gisele's appointment is a vote of confidence in the future of women in our party and it's a clear message to communities, like Bradfield, that if you support your local Liberal member, they will have a direct say in the decisions that change the direction of this country," she said. Labor's post-election honeymoon, which to date has seen a RBA rate cut and a Coalition implosion, saw the good news continue to flow at the start of the week with confirmation it had just elected Australia's youngest ever senator, South Australian Charlotte Walker whose 21st birthday was election day. The party also picked up an extra senate seat in Victoria and the ABC is projecting the party will retain the Melbourne seat of Calwell, meaning Labor didn't lose a single seat in the election. After facing a nervous wait, Tasmanian Jacqui Lambie held off a challenge from Labor and One Nation to retain her Senate seat. With the NSW race yet to be called, Labor is on track to win 29 seats in the upper house, meaning the Greens are the only crossbenchers needed to pass legislation. It could have got as high as 30 but Labor lost the final WA senate seat to One Nation, taking Pauline Hanson's ranks to three. It hasn't all been smooth sailing for the good ship Albanese. The factional warlords who oversaw Ed Husic's demise from the cabinet are getting a reminder of just how useful MPs can be from the backbench (RTYI Jane Hume). Initially opting for an opinion piece in Guardian Australia, the former industry minister criticised his own government for its response to Israel blocking aid getting into Gaza. By Monday, Albanese was offering his strongest criticism of the Israeli government. He said Israel's "excuses and explanations" for blocking aid were untenable and "completely unacceptable" and "an outrage". While Husic was calling for Australia to call in Israel's ambassador, privately the government insisted that was unnecessary given the prime minister had gone a step further and raised his criticisms direct with the country's president when the two men were in Rome recently. Albanese's approach to contentious foreign affair issues has been to step out with leaders of like-minded nations, especially Canada and New Zealand. Husic was quick to note that didn't happen this time when the UK, France and Canada threatened to impose sanctions on Israel. While praising the PM for speaking out, he insisted now was the moment for actions, not just words. No longer bound by collective responsibility and cabinet solidarity, Labor's leaders are getting a reminder of the consequences of kicking someone unafraid to use their voice outside of the tent.
The Guardian
3 days ago
- Business
- The Guardian
Ask the experts: how do you make your money matter?
The rising cost of living undoubtedly affects the choices we can make, but research suggests Australian shoppers are still driven by their personal values. Sustainability is one of the biggest considerations. When Monash University surveyed Australian shoppers in 2024, 46% said sustainability was an important factor when they were making a retail purchase, while 30% frequently looked for sustainable products. Ethical supply chains, animal welfare, and commitments to diversity and inclusion are also common considerations for consumers, other research has found. This thinking affects decisions about products and services, but experts say to see real impact, we need to apply ethics to our financial and superannuation choices, too. Many Australians already do this. Research conducted by the Responsible Investment Association Australasia (RIAA) found that in 2024, 88% of Australians expected their investments to be responsible and ethical, up from 83% in 2022, while 65% said they would invest more if their investments made a positive impact in the the world (up from 61% in 2022). The RIAA's co-CEO, Estelle Parker, suggests we carefully consider our individual values when choosing where our money goes. Almost all of us are investing in shares and other assets via the choices our super funds make on our behalf – which don't necessarily fit with our own values. Fortunately, it's easy to switch to a fund that's more aligned. 'The first thing is to decide what they want to achieve with their investment portfolio,' Parker says. 'People can look at the websites of the funds they're considering and make sure that those funds actually do support their values.' Every super fund is legally required to disclose its investments, but the disclosure isn't always that easy to find or understand. Fortunately, there are tools that can help. Parker recommends checking out Responsible Returns, an independent source of information about super funds' portfolio holdings, and Market Forces' regular reports on how the finance industry contributes to climate change. Responsible Investment Association Australasia CEO, Estelle Parker 'We are all in a position to make a small difference through our super or other investment portfolios,' Parker says. 'People are cottoning onto that, and the growing demand is being met by really good quality financial investment options that people can take advantage of. One of the funds featured on the Responsible Returns website is Australian Ethical. Alison George, Australian Ethical's chief impact and ethics officer, spends a good part of her working week making sure that where Australian Ethical invests its customers' money – which adds up to more than $13bn in managed funds and super – reflects the organisation's values and those of its customers. 'Australians have a choice of which super fund they have and can move that money at any time,' George says. 'You are making a choice, whether you're making an active one or not.' Doing nothing, George says, is an action in itself. 'At Australian Ethical we have a theory of change for the future that guides the way we approach business and approach investment. We believe that if consumers vote with their choices and move to the funds that care about people, planet and animals, this kind of investing can grow. 'One day it could just be normal for investments to consider the impact on the environment and society as well as the impact on the bottom line, and money can become a force for good.' Australian Ethical chief impact and ethics officer, Alison George For many people, super is one of the largest investments we will make in our lifetimes – and together we can use it to make significant impact. 'The choices that we make as individuals do matter,' George says. 'Like climate change: we know it's an urgent threat. We know that as individuals, it's hard for us to tackle and engage with. But your money aggregated with others, invested for positive climate solutions for the future, is a great way that you can be doing your part to shift the dial on that issue.' Will van de Pol is the CEO at Market Forces, which holds Australian financial institutions to account on climate. He says values-driven decisions are one of the most powerful ways we can make our money matter. 'When it comes to taking on some of the world's biggest challenges – like climate change – ensuring that your power as the customer is used in a way that drives solutions to problems is incredibly important and powerful,' he says. 'The point is to make decisions about what you value most highly and see as ethical, and follow that through with your decision-making.' Market Forces CEO, Will van de Pol Australians who care about sustainability might choose to buy locally grown produce or an electric vehicle. If fair working conditions are important, they might research a product's supply chain or find alternatives to fast fashion. George says: 'We're all busy people – but the idea here is to start acting on what you know and think about making better choices, rather than doing nothing while you wait for perfect information. 'When you have time, put that effort into things that are more impactful and bigger choices for you. The car you drive, your bank, your super fund – they're all good examples of decisions that can have really broad-ranging and long-term impacts. Australian Ethical is seeing more people making values-based choices about their super, George says. 'People are recognising the importance of their superannuation money as something that they want to make sure is invested well, for themselves, for the planet and for society as well.' With $4.2tn held in super – more money than Australia's GDP – the potential for supporting change is profound. Imagine if all of that money was invested in companies trying to change the world for the better. A super fund that aligns with our values is one way we can become part of a force for good. Learn more about how Australian Ethical can invest your money to help build the future you want for yourself, your family and the world. This information is general in nature and is not intended to provide you with financial advice or take into account your personal objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances and read the PDS and TMD at Issued by Australian Ethical Investment Ltd (ABN 47 003 188 930, AFSL 229949).
News.com.au
3 days ago
- Business
- News.com.au
‘Special rules' will exempt Prime Minister Anthony Albanese from super tax, senator James Paterson says
The newly appointed opposition finance spokesman is accusing Jim Chalmers of writing 'special rules' that will exempt Anthony Albanese from Labor's super tax until after the Prime Minister retires. Critics have blasted the Albanese government's proposal to roll back concessions on ultra-high super balances as a tax on unrealised gains that would penalise younger generations down the track. Only half a per cent of Australians – some 80,000 – have super balances north of $3m. But James Paterson on Thursday said taxing people for profit they had not received was 'a really significant violation of an important tax principle that you don't tax paper profits, that you only tax profits that people actually receive, that actually materialise'. Senator Paterson warned that it was a 'fiscal failure' that 'all Australians are going to bear'. Under the policy, super accounts above $3m would be slugged with an extra 15 per cent on earnings, pumping $2.7bn into Commonwealth coffers annually, according to Treasury estimates. But federal politicians enrolled in defined benefit pension schemes might not need to pay until after they retire, the Australian Financial Review has reported. Conceding the legislation was likely to be passed with the support of the Greens, Senator Paterson said that 'won't stop us arguing against it because we think it's wrong in principle'. 'And we think it is even worse that it has failed to be indexed by the government, so over time, it will eventually capture average working Australians, not just wealthy Australians,' he told Sky News. 'And we think it's really frankly dodgy that Jim Chalmers has written special rules into the regulations that will exempt his boss, the Prime Minister, from paying this tax during his working life on his defined benefit pension, unlike every other taxpayer who will have to pay this if they cross that threshold.' It was revealed earlier this month that a handful of judges and former state-level officials would be exempt from the tax. 'Those earnings in superannuation funds that the constitution prevents being taxed by the government will be excluded,' a government summary document reads. Labor ministers have insisted everyone eligible would pay the tax regardless of their status. Senator Paterson nabbed the finance portfolio in Sussan Ley's new-look shadow cabinet on Wednesday. He took over from fellow Victorian senator Jane Hume, who got bumped to the backbench after a blunderous performance during the federal election campaign.
