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Off Topic Superanuation

Discussion in 'Sunderland' started by fredor, May 18, 2017.

  1. fredor

    fredor Well-Known Member

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    In the early 1980s the Australian government introduced a Superanuation benefit for all Australian workers whereby every employer had to pay an amount equal to 6% of weekly earnings into a recognised Super Fund for every employee, this has increased to its present level of 9.5% and will rise 0.5% each year untill it reaches 12%, this is paid on top of the weekly wage and is not a deduction from them, An average Aussie worker has a nest egg of hundreds of thousands of dollars and of course someone working their whole life in the millions, this money is invested and profits paid to the individuals, the one caveat is that it cannot be touched unless unusual circumstances like health or other problems untill retirement at present set at the earliest of age 50 but depending when you were born will rise to 60
    I cannot help but think would be a good idea to introduce in the UK as I cannot see any downside to it, there are at present over 2 trillion dollars of money that is available for investment, a popular one being shopping centres which in some places are more like theme parks
    When this money is eventually drawn it is not taxable depending on how it is accessed IE as a lump sum anything over 600,000 would attract some tax but as a weekly annuity this rises to over one million before tax would be liable

    Food for thought

    PS. I am going to call on Haslam to explain that magic that is called Compounding Interest with returns this year, a bad one, in double figures
     
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    Last edited: May 18, 2017
  2. MrRAWhite

    MrRAWhite Well-Known Member

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    We pay into pension funds which in reality is the same thing..
     
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  3. haslam

    haslam Well-Known Member

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    Compound interest fun!

    You take your investment and multiply it by a decimal multiplier for each year of investment. The multiplier is a decimal based on the percent interest (so 3% interest would be 1.03 and 7% interest would be 1.07). If you invest £2000 at 6% interest for 3 years you get 2000 X 1.06 X 1.06 X 1.06 at the end of it (though you can use 'to the power of' to speed this up).

    In the UK the average earnings are (lets say for ease) £25000. 12% of that would be £3000 a year of the employers money. So after 50 years (and yes that is around the number of years someone entering the workforce now would be expected to work) that's £150,000 BUT that doesn't cover interest on the money, or interest on the interest generated.

    If I understand you correctly (and I'm not certain I do) then they get 12% interest on the money that has been set aside for them? If so then you'd need to work out what each years investment was worth after the number of years it had been invested - for instance the initial £3000 would, after 49 years, be worth wait for it... £774,113 alone. Which is just insane. That is just £3000 left in an account for 49 years on 12% interest, not any of the other years being paid in. I assume I've misunderstood and the 12% refers only to the amount of their earnings which gets set aside rather than the interest thereon otherwise it's going to escalate quickly!
     
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  4. haslam

    haslam Well-Known Member

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    True and I strongly suspect it is going to be further reinforced by the state to make in mandatory to a higher level than currently. My wife and I both have pensions through work and private pensions too but most people our age who aren't state sector seem (purely anecdotal here by the way) to be interesting in putting money into a pension.
     
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  5. MrRAWhite

    MrRAWhite Well-Known Member

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    Both me and my wife are in works pension schemes based on final average salary of the last 3 years at work. I also pay into a private pension scheme, so hopefully will be OK once I decide to retire..
     
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  6. rooch 3

    rooch 3 Well-Known Member

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    Better than doubling up rice on a chess board.<ok>
     
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  7. haslam

    haslam Well-Known Member

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    Final salary schemes are almost entirely gone for people under 50 though, so many of my colleagues and friends don't seem to realise they're sleep-walking towards a horror show! It's like one huge Ponzi scheme and there's not going to be anything left in the pot. It gets some air time in the media but it wont be mainstream for another couple of decades when the **** really starts to hit the fan.
     
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  8. haslam

    haslam Well-Known Member

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    That is a cracking story mind.

    Folding paper - around 7 or 8 times is the most you will manage. 20 times would make it taller than Mt Everest and around 40 times covers the distance to the moon. Sounds ridiculous but its mathematically correct!
     
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  9. rooch 3

    rooch 3 Well-Known Member

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    Amazing how many people think its a piece of piss like trying to break an egg length ways in your hand or betting somebody you can throw a raw egg as far as you can in a field and it won't break take their money and throw it it won't
     
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  10. haslam

    haslam Well-Known Member

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    Not heard the throwing egg one before. I assume its because the relatively light weight of the egg means it has a small terminal velocity and coupled with the grass acting as a buffer and lengthening the impact time the force doesn't reach a high enough level to actually crack the egg. I'd have thought the length of the grass matters though. Going to try that now with my kids!
     
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  11. rooch 3

    rooch 3 Well-Known Member

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    Done it when there is hardly any grass.<ok>
     
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  12. Gordon Armstrong

    Gordon Armstrong Just another S.A.F.C. fan
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    Remember not to throw your kids too far, mind :emoticon-0105-wink:
     
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  13. Vincemac

    Vincemac Well-Known Member

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    Hold on there
    I was forced to pay all my life into
    First superannuation which I basically could not afford
    But was told when I retired I would benefit with a pension on top of my old age pension and would have more money.
    Second changed my job and transferred my superannuation into my second job.
    Payed that for a further 30 years
    Then when the time came to collect my oap it was drastically reduced
     
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  14. Vincemac

    Vincemac Well-Known Member

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    Yeh I know but
     
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  15. Vincemac

    Vincemac Well-Known Member

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    It was reinforced in 1976
     
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  16. Vincemac

    Vincemac Well-Known Member

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    Hope so mate but you will not get full state pension
     
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  17. fredor

    fredor Well-Known Member

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    I am a bit confused over your description ( The money that has been set aside for them ) to my way of thinking like wages it has been " Paid into their account " every employee has their own Superanuation account the same as they have different bank accounts the main difference being you cannot draw down from your Super account untill you retire, in all other respects it is the same , you receive a regular statement from the fund manager and you can log on at any time to check on YOUR account , how much is in there and if your employer has paid in the correct amount this month, your money earns interest in the same way as your bank account but because of the way it is structured the fund managers know that it will not vary and can invest accordingly , the interest rate for this year will be 10% in bad times , and as it is added to your total it will of course be compounding each year to my mind

    If we take a tradesman working on a building site he will be earning 1000 dollars a week ( More but I will stick to round figures ) the employer will pay 1000 dollars less tax into his bank account for the week and almost 400 dollars into his Super account for the month, if you are not satisfied with the way your fund manager has performed you can switch your money to another one at any time, another important thing, all profits after expences are paid to members no shareholders or anyone else to keep happy.

    The point that everyone seems to be missing is that this applies to EVERYONE not just a select group that are earning enough to be able to afford super

    PS The old age pension in Australia is means tested , your primary place of residence is excluded but everything else counts

    https://en.wikipedia.org/wiki/Superannuation_in_Australia
     
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    Last edited: May 19, 2017
  18. haslam

    haslam Well-Known Member

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    Grand, thought the figures coming up were too much to quite be correct but as i suspected I hadn't quite followed. Heading out to work but I'll have a look later at the site, I genuinely do find it interesting to see how different people/ countries are preparing for the pension years. It seems to me to be a huge issue which most are happy to sweep under the carpet, like you say it needs to apply to everyone not just a select group.
     
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  19. red&white wanderer

    red&white wanderer Well-Known Member

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    Your righ tthere I was lucky enough to be in a final salary scheme and over 50 when I was made redundant.
    I had 39 years in but due to being contracted out do not qualify for a full state pension when I'm 66.
    For all before you retire make sure you get a state pension forcast and find out how many years you need for a full state pension.
    I think it'll become means tested and if you have a works pension you'll get little if any state pension .
     
    #19
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  20. haslam

    haslam Well-Known Member

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    Rubbish day and back in again tomorrow! Will come back to this but probably not for a day or so. Now need sleep :)
     
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