There seems to be some misunderstanding in the community as to why self funded retirees are so angry at the Labour proposals. Because this group of people manage their own retirement funding through the vehicle of superannuation they are well aware of what it takes to earn income through investment, and make that income plus the capital saved last to the "end".
Allow me to give an example.
I have a friend who is on the full single pension and owns his own home. He gets paid the maximum pension ($834.40) plus a pension supplement ($67.80) plus an energy supplement ($14.10) totaling $916.30 a fortnight. That's a total of $23,823.80 a year (ignoring other discounts offered to pensioners such as rates, car registration, utilities, transport etc....).
He has a SMSF with $175,000 in it which is under the assets test and deemed by the income test to earn $4,412.50 a year so he is under the threshold and gets all payments and no tax. He is however a competent investor and invests all the SMSF's capital in various listed investments that yield an average of 7% (which includes all franking credits now and after the Labour onslaught) and therefore gets income of $12,250.00 each year. His full income for a year is therefore $36,073.80.
He invests all his SMSF capital in listed investments as he reasons the money he gets from the pension is guaranteed and indexed so is the same as having money in the bank. He argues that he would need $794,126.67 in term deposits returning 3% to get the same as the pension ($23,823.80). Do the sums - he is quite correct.
Therefore my friend has the equivalent of $969,126.67 in effective capital generating his untaxed income. He has nothing to fear from Labour withdrawing his pension or franking credits as he will be immune. Unfortunately someone who has saved the same amount of capital through their SMSF will be assaulted by the Labour policy and lose their franking credits contributing up to 30% of their funds income.
But you have the capital amount to draw on I hear you say. That's quite true but when you think of the numbers above you may well wonder - why bother? Maybe it would have been better to travel first class, buy that porsche and the flash house and live it up instead. After all the tax payer can look after you till the "end".
That is why we are so angry!!!!!
