Superannuation - the politician's piggybank?

Are Australian politicians seeing superannuation as a piggybank account?

It seems that Australian politicians just can't help themselves - barely a year goes by without some tinkering or meddling in the structure of superannuation. The reasons vary, but apparently "equity" is the reason underpinning the soon soon to be announced reduction in the superannuation tax concession to individuals earning more than AUD300,000 per annum (from 30% to 15%). But it just so happens that the change helps fill a budget deficit and only affects the top 1% of income earners, who are not assumed to be Labour voters.

Budget stress is not going to go away, and neither are the demographics which mean that it will become increasingly difficult for Australia to support the superannuation system as it currently exists - so, expect more politicians hovering around the piggy bank, and moves away from the lump sum payments that have always been an unusual characteristic of superannuation. Good sense, combined with a lot of lobbying by vested interests, is going to increasingly mean more emphasis on annuities in Australia.

This means from our point of view that Australian expats should think long and hard about contributing to superannuation while non-resident. The emphasis should be on wealth and asset accumulation outside of superannuation while you are overseas, to increase flexibility - particularly given many expats will not retire fulltime to Australia and therefore tax efficiency is less of a driver.

We still like one aspect of superannuation, and that is "forced savings" - so whether you invest in offshore savings or investment products, real estate or a combination of asset types, just make sure that the money doesn't find it's way into what economists call "consumption". It still remains the case that many Australian expats in our experience still return home less well-off than when they left, and that should not be the case given a little planning!