The fact that this particular "Grandfathering" [for Account Based Pensions] has been rushed through Parliament on the very eve of publication of the Murray Report should have the alarm bells sounding at 140 db.
The Murray Report has several Grandfathering Recommendations for such as Negative Gearing, and all will be considered by the Govt in the fullness of time, so why was this singular provision not just put into the mix of the Report?
The simple answer is the Govt did not WANT any official comment on the REASON for the REPEAL, and let's be totally clear that the Amendment was not to "add" any new provisions but to repeal [over 20 years or so] the existing statutes that treat Income Testing of Account Based Pensions differently to all other Assets.
So repeal of those statutes simply removes the "special treatment" and the Testing reverts to the same as for any other "non-Centrelink" [eg car etc] assets. Nothing has been added.
So while the Report must therefore consider that matter "done and dusted", it does still refer to certain "symptoms" OF the issue, but without pointing too straight a finger.
"Information from stakeholders suggests that many retirees find it
challenging to navigate the transition to the retirement phase of
superannuation. When DC members notify their superannuation fund of
their retirement, many funds recommend they speak to an affiliated
financial adviser. Research has demonstrated that the quality of this
advice can vary significantly. Anecdotal evidence suggests that some advisers have limited knowledge of longevity risk and how it can be managed. Although the Inquiry makes recommendations to improve the quality of advice, it will take time for such improvements to occur."
The Report goes on to say:
In any case, many people do not seek professional advice, and funds and
advisers overwhelmingly recommend account-based pensions. Stakeholders
advise that, for less financially literate individuals, the simplest
option is to take the entire benefit as a lump sum because other options
can be difficult to understand and may require completing complicated
forms. A recent survey commissioned by AustralianSuper found that “… 85%
of pre-retirees are not confident in having an informed conversation
around retirement income”. Managing income and risks can be particularly difficult for people
later in retirement if they suffer from cognitive impairment.
And finally:
Despite the heterogeneous nature of retirees, at least 94 per cent of
pension assets are in account-based pensions, which provide flexibility
but lack risk management features and may not deliver high levels of
income from a given accumulated balance.
The lack of a significant market for products with longevity risk
protection sets Australia apart from most other developed economies. Evidence suggests that the major worry among retirees and pre-retirees is exhausting their assets in retirement. An individual with an account-based pension can reduce the risk of
outliving their wealth by living more frugally in retirement and drawing
down benefits at the minimum allowable rates. This is what the majority of retirees with account-based pensions do, which reduces their standard of living. The difficulty in managing this risk is also exacerbated by the uncertainty as to how long a retiree will live.
So all the issues that caused the Govt to panic to make the Grandfather Amendments are there, but the wording is of course "coded" so as to not lay blame on BigSuper or the Govt itself, ie it is a TYPICAL Report in "times of need" (ie to cover up) but is really "much ado about nothing".
The most poignant issue as seen is "cognitive impairment later in retirement" and irony is that such is the reason the Govt has got away with the (soon to be) Grandfather Rules for so long. That is to say that Age Pensioners get taken in by the shonky "advisers" at age 65 to simply drawdown the minimum amount and if they were not bright enough to SEE they were being taken in (for the benefit OF the adviser) at 65, then by 75 they have no hope at all to do anything as each year they see their Age Pension drop by 5% or more.
Complaint to their adviser will be met with a shrug of the shoulders and "that's the Govt, not us".
Complaint to Centrelink will be same shrug of shoulders and "sorry, that's how the Legislation works, your problem is you took bad advice to keep increasing your capital and that means we drop your Age Pension".
Yes, the Murray Report has "done its job", so back to "Situation Normal" for BigSuper and the Govt.
That is AS LONG AS the forgotten "Stakeholder" (the Pensioner) him/her self REMAINS in a state of ignorance (aka Stockholm Syndrome) about this little $10 billion pa fiddle by the Govt.
Hitler of course has the final say with:
"It is most fortunate for governments that the people do not think"
And until recent times a Govt could get by on that basis, as people simply HATE to think.
But with Twitter etc now on the scene it is more a matter of FLIPPING (ie without actually thinking) from Grandfather to Freedom, and THAT is the $10 billion pa problem facing this Govt.
Thursday, December 11, 2014
Thursday, December 4, 2014
The Abbott SWOT Analysis on Grandfather
Anyone who has had anything at all to do with Marketing [Corporate or Governmental] will understand that questions like "Should we take our ship OUT of the harbour", eg Amend Legislation, are examined by the SWOT Analysis, which weighs up the competing issues of:
S - STRENGTHS
W - WEAKNESSES
O - OPPORTUNITIES
T - THREATS
But before we get the SWOT show on the road a bit of background will help.
The issue here is the 1 January 2015 amendment to the Testing Rules for Age Pensions, commonly referred to as the "Grandfather Rules", where the Grandfathered Rules are those pre 1 January 2015 and the New Rules [Deeming of Capital] are those post 1 January 2015.
The BIG Problem is that our modelling says that there is a $10 billion dollar per annum difference between PRESENT Pensioners staying Grandfathered and "sweeping" their Account Based Pension so as to go under the New Rules. To further explain, the Govt stands to LOSE that much, if all Pensioners TAKE that option. At present Big Super is working overtime to SCARE Pensioners into the protective arms of Grandfather.
We don't think there is any need to PROVE that but if examples are needed then see Ennis and Alma Revisited or Margaret or Joe or worse still is when we TRIED HARD to disprove our own findings at Devil's Advocate but it simply got 4 times as bad.
We even tried a trumped up case [in favour of Grandfather] by a Big Super Advisor Case of Victoria but it still worked out Victoria was $120,000 worse off with Grandfather.
But back to the beginning, in 2009 we offered a "Hi-Tech" service at agepensionsolutions.com which modelled the Allocated Pension for 20 years or more AND equated that to the Age Pension to assist Pensioners plan their Retirement. And it seems to have caused a bit of a stir in Big Super, or maybe just the Govt part of it.
Whatever, the seeds were sewn back then to start the process to enact [in 2015] the so called Grandfather Amendments and it seems this image is what caused the stir. The wise rule of "If it ain't BROKE, don't MESS with it" is especially relevant to amending legislation, SO [as discussed below] a big problem MUST have been seen here litigation wise.
It seems therefore that they had NOT done their own modelling many years ago when they introduced this Rule that divides your Allocated Pension Capital by your Life Expectancy, but certainly called in their own spreadsheet experts to check our modelling. And of course there is the obvious "sexist discrimination" MINEFIELD that under Grandfather Rules a Female gets about $20,000 less Age Pension over 20 years purely because women live longer than men.
And here is Twist #1 - we had thought the legislation said to divide the remaining Capital by the revised Life Expectancy every year, whereas we have now fixed that to divide START Capital by START Life Expectancy, so the effect on the Pensioner is not as bad as in the black closet [but see below], BUT obviously the Govt has done its new modelling on the proper Rule and STILL considered the result a PROBLEM.
What we did on the website was to mimic the "trendoid" manner of explaining legislation in Explanatory Memoranda etc using fictitious names, so we used Ennis and Alma from Brokeback Mountain movie for no particular reason, not realizing the irony in that choice.
To explain, Ennis was married to Alma but for 20 years was having a homosexual affair with Jack, and the whole plot resolves right down to the All American Ellen Degenerate Closet at the end.
So here is the irony that Brokeback fans [called Brokies] say that because of the refusal of Ennis to come OUT of his Ellen Degenerate Closet in that second decade of THEIR 20 year period, things went really pear shaped for them [and of course "Gay Rights"].
Then for Abbott, he has simply DEALT with the matter in his own Ellen Degenerate closet [the black box showing the second decade of the life of a Pensioner] for better or worse. BUT has he told the PENSIONER about the darker contents of his Closet?
The horrific truth Abbott is trying to hide from the PRESENT Pensioners [of 75 to 85 age band] is that the gradual diminishing of their Age Pension year by year can be AVOIDED simply by "throwing overboard" their Big Super Advisor [and Grandfather], sweeping their Account Based Pension Residual and thus going onto the New Rules.
So we can now use the SWOT to EXAMINE the better/worse.
In 2009 or so the Govt carefully considered the situation where an AGGRIEVED person might well have a CHOSE IN ACTION in a COURT WITH JURISDICTION to SEEK RELIEF from the effects of the legislation [now called Grandfather].
If the person properly DEPOSED and ARGUED their case [ie did NOT use a lawyer] then such a court would logically [behind closed doors] CONCLUDE [but not DETERMINE] that "the shit had hit the fan" and it needed to go "into damage control" by continually ADJOURNING the case until the Govt fixed the legislation.
Now we don't know here if there WAS one or more court cases or if it was perhaps based upon our "closet evidence" or other. The only thing that matters is the Govt DID initiate and now execute an amendment. Indeed, a nasty precedent case [eg Mabo] can have devastating consequences.
By DOING that the Govt has REMOVED the CHOSE IN ACTION [at least under the Grandfather legislation]. That is to say the court can now say that the legislation now allows the Pensioner to escape Grandfather by "sweeping" their Allocated Pension to a new one whereby they must use New Rules [so case dismissed with costs].
And as for a Pensioner pleading PAST losses, the Govt in 2011 was very quick to do a clandestine fiddle with S 8 of the Acts Interpretation Act [1901], and finally we have been "locked out" of our own website [for "Unknown Unknown" reasons to use the WMD/9/11 terminology]. So all this points to that lovely High Court euphemism from Luton "it looks like minds were turned in government".
So the STRENGTHS are that Abbott has "thrown overboard" the threat of court action [ie a Precedent Case to "Open the Floodgates"], and at same time pick up an extra $40 million pa from the NEW folk on the New Rule.
But it is a TWO Edged Sword, because one edge helps Abbott by preventing any court challenges but the other edge simply allows Pensioners to escape the Grandfather Rules without the fuss of going to court.
And then the Sword becomes The Sword of Damocles because the thin thread that holds it up is MISinformation [and spin] by Big Super to Pensioners regarding the issue from above still hidden in the CLOSET.
That is to say Abbot plans to save $40 million pa because the New Rule "stings up front" so New applicants for the Age Pension will be worse off in the short term, BUT with the Grandfather Rule "the sting is in the tail" and as such DENYING the 1 million or so 75 years old plus Pensioners of about $10 billion pa.
And the thread holding up the Sword of Damocles is simply that they DON'T KNOW THAT, and the THREAT is they COULD - so we move to that part of the SWOT, as is quite normal, dealing with the SWOT elements out of strict order.
As stated above the only issue that would prevent the Govt going down the gurgler by $10 billion pa is the IGNORANCE of the Pensioners to the true situation, and as stated the WMD Terror Campaign of Big Super is presently doing its job for the Govt in maintaining the ignorance.
On the other hand the ubiquitous "Social Media" can very quickly "spread the word" to bring about the "snowball effect" and down comes the Sword of Damocles on Abbott's Feast/Party [pun intended].
It's as simple as that, ie once the worm starts to turn it can very quickly turn totally. At present the worm has not even started to turn but it is anybody's guess as to how soon it might start and how quickly it might DESTROY.
The obvious answer/opportunity/imperative for Abbott is to END the THREAT.
To continue the analogy, he has created the Sword of Damocles as the means of solving the issue, but that does not mean he can't replace the present gossamer thread holding it up with a thumping great length of high tensile chain so that the Sword will STAY up there.
There are two ways to do that - a stupid way and a sensible [legal] way and while Abbott has traditionally taken the stupid way and insisted on putting both feet in his mouth, we will explain the options for him here.
The stupid way is to continue his "how bizarre" Brogdonian ways of 2005 and have ME [the author of the websites, LOPS and blogs] "taken out".
Firstly I have taken the usual "Pauline Hanson Personal Security" remedy here, so my death would point straight TO Abbott, but secondly it is not ME that is the problem but my websites, LOPS and blogs that are the problem. My death would simply leave all the THREAT sitting "in the cloud"
The sensible way is to simply "convince me" via the legal paths available to Abbott to REMOVE all my web content.
I obviously will not be explaining here how those paths work but by way of a Ministerial to my Local MP [the democratic method of the Constitution].
So one remaining question lingers as to is it possible "others" might come forward and do the same "whistle-blowing"?
Of course I can't answer that but I can give my estimate on the chance of that happening as being "about 1 in 5 billion".
There is nothing egotistical in the estimate but simply a statement that the Good Lord or HAL deemed [no pun intended] to give me Lucy type powers to be able to "analyse situations" well beyond the normal capabilities of J Doe, and I have used them from time to time DESPITE the detriment to my personal life.
I don't think there are any others living in Australia at present that have that burden, hence my 1 in 5 billion estimate.
In other words the term Conspiracy Theory is very commonly used to describe crackpot ideas, most without any merit in fact. But my Modus Operandi totally supports the suppositions WITH fact, so ceases to BE Conspiracy Theory.
I rest my case/SWOT.
S - STRENGTHS
W - WEAKNESSES
O - OPPORTUNITIES
T - THREATS
But before we get the SWOT show on the road a bit of background will help.
Background
The issue here is the 1 January 2015 amendment to the Testing Rules for Age Pensions, commonly referred to as the "Grandfather Rules", where the Grandfathered Rules are those pre 1 January 2015 and the New Rules [Deeming of Capital] are those post 1 January 2015.
The BIG Problem is that our modelling says that there is a $10 billion dollar per annum difference between PRESENT Pensioners staying Grandfathered and "sweeping" their Account Based Pension so as to go under the New Rules. To further explain, the Govt stands to LOSE that much, if all Pensioners TAKE that option. At present Big Super is working overtime to SCARE Pensioners into the protective arms of Grandfather.
We don't think there is any need to PROVE that but if examples are needed then see Ennis and Alma Revisited or Margaret or Joe or worse still is when we TRIED HARD to disprove our own findings at Devil's Advocate but it simply got 4 times as bad.
We even tried a trumped up case [in favour of Grandfather] by a Big Super Advisor Case of Victoria but it still worked out Victoria was $120,000 worse off with Grandfather.
But back to the beginning, in 2009 we offered a "Hi-Tech" service at agepensionsolutions.com which modelled the Allocated Pension for 20 years or more AND equated that to the Age Pension to assist Pensioners plan their Retirement. And it seems to have caused a bit of a stir in Big Super, or maybe just the Govt part of it.
Whatever, the seeds were sewn back then to start the process to enact [in 2015] the so called Grandfather Amendments and it seems this image is what caused the stir. The wise rule of "If it ain't BROKE, don't MESS with it" is especially relevant to amending legislation, SO [as discussed below] a big problem MUST have been seen here litigation wise.
We have just now added the black "closet" [to be explained shortly] to highlight the area of our modelling which had inadvertently caused the Govt to SEE the effects of the Income Testing Rules once the Pensioner got to 75 or so.
It seems therefore that they had NOT done their own modelling many years ago when they introduced this Rule that divides your Allocated Pension Capital by your Life Expectancy, but certainly called in their own spreadsheet experts to check our modelling. And of course there is the obvious "sexist discrimination" MINEFIELD that under Grandfather Rules a Female gets about $20,000 less Age Pension over 20 years purely because women live longer than men.
And here is Twist #1 - we had thought the legislation said to divide the remaining Capital by the revised Life Expectancy every year, whereas we have now fixed that to divide START Capital by START Life Expectancy, so the effect on the Pensioner is not as bad as in the black closet [but see below], BUT obviously the Govt has done its new modelling on the proper Rule and STILL considered the result a PROBLEM.
What we did on the website was to mimic the "trendoid" manner of explaining legislation in Explanatory Memoranda etc using fictitious names, so we used Ennis and Alma from Brokeback Mountain movie for no particular reason, not realizing the irony in that choice.
To explain, Ennis was married to Alma but for 20 years was having a homosexual affair with Jack, and the whole plot resolves right down to the All American Ellen Degenerate Closet at the end.
So here is the irony that Brokeback fans [called Brokies] say that because of the refusal of Ennis to come OUT of his Ellen Degenerate Closet in that second decade of THEIR 20 year period, things went really pear shaped for them [and of course "Gay Rights"].
Then for Abbott, he has simply DEALT with the matter in his own Ellen Degenerate closet [the black box showing the second decade of the life of a Pensioner] for better or worse. BUT has he told the PENSIONER about the darker contents of his Closet?
"That's Not a Twist --"
To continue the movie analogy, we add the Paul Hogan "-- THIS is a Twist"The horrific truth Abbott is trying to hide from the PRESENT Pensioners [of 75 to 85 age band] is that the gradual diminishing of their Age Pension year by year can be AVOIDED simply by "throwing overboard" their Big Super Advisor [and Grandfather], sweeping their Account Based Pension Residual and thus going onto the New Rules.
So we can now use the SWOT to EXAMINE the better/worse.
STRENGTHS
Please excuse the legalese to describe the situation, but it is necessary.In 2009 or so the Govt carefully considered the situation where an AGGRIEVED person might well have a CHOSE IN ACTION in a COURT WITH JURISDICTION to SEEK RELIEF from the effects of the legislation [now called Grandfather].
If the person properly DEPOSED and ARGUED their case [ie did NOT use a lawyer] then such a court would logically [behind closed doors] CONCLUDE [but not DETERMINE] that "the shit had hit the fan" and it needed to go "into damage control" by continually ADJOURNING the case until the Govt fixed the legislation.
Now we don't know here if there WAS one or more court cases or if it was perhaps based upon our "closet evidence" or other. The only thing that matters is the Govt DID initiate and now execute an amendment. Indeed, a nasty precedent case [eg Mabo] can have devastating consequences.
By DOING that the Govt has REMOVED the CHOSE IN ACTION [at least under the Grandfather legislation]. That is to say the court can now say that the legislation now allows the Pensioner to escape Grandfather by "sweeping" their Allocated Pension to a new one whereby they must use New Rules [so case dismissed with costs].
And as for a Pensioner pleading PAST losses, the Govt in 2011 was very quick to do a clandestine fiddle with S 8 of the Acts Interpretation Act [1901], and finally we have been "locked out" of our own website [for "Unknown Unknown" reasons to use the WMD/9/11 terminology]. So all this points to that lovely High Court euphemism from Luton "it looks like minds were turned in government".
So the STRENGTHS are that Abbott has "thrown overboard" the threat of court action [ie a Precedent Case to "Open the Floodgates"], and at same time pick up an extra $40 million pa from the NEW folk on the New Rule.
WEAKNESSES
Abbott has effectively drawn a line in the sand of 1 January 2015 and dug in his Sword to mark "Checkpoint Charlie" where "certain people are allowed to go in certain directions across the line at certain times".But it is a TWO Edged Sword, because one edge helps Abbott by preventing any court challenges but the other edge simply allows Pensioners to escape the Grandfather Rules without the fuss of going to court.
And then the Sword becomes The Sword of Damocles because the thin thread that holds it up is MISinformation [and spin] by Big Super to Pensioners regarding the issue from above still hidden in the CLOSET.
That is to say Abbot plans to save $40 million pa because the New Rule "stings up front" so New applicants for the Age Pension will be worse off in the short term, BUT with the Grandfather Rule "the sting is in the tail" and as such DENYING the 1 million or so 75 years old plus Pensioners of about $10 billion pa.
And the thread holding up the Sword of Damocles is simply that they DON'T KNOW THAT, and the THREAT is they COULD - so we move to that part of the SWOT, as is quite normal, dealing with the SWOT elements out of strict order.
THREATS
As stated above the only issue that would prevent the Govt going down the gurgler by $10 billion pa is the IGNORANCE of the Pensioners to the true situation, and as stated the WMD Terror Campaign of Big Super is presently doing its job for the Govt in maintaining the ignorance.
On the other hand the ubiquitous "Social Media" can very quickly "spread the word" to bring about the "snowball effect" and down comes the Sword of Damocles on Abbott's Feast/Party [pun intended].
It's as simple as that, ie once the worm starts to turn it can very quickly turn totally. At present the worm has not even started to turn but it is anybody's guess as to how soon it might start and how quickly it might DESTROY.
OPPORTUNITIES
The obvious answer/opportunity/imperative for Abbott is to END the THREAT.
To continue the analogy, he has created the Sword of Damocles as the means of solving the issue, but that does not mean he can't replace the present gossamer thread holding it up with a thumping great length of high tensile chain so that the Sword will STAY up there.
There are two ways to do that - a stupid way and a sensible [legal] way and while Abbott has traditionally taken the stupid way and insisted on putting both feet in his mouth, we will explain the options for him here.
The stupid way is to continue his "how bizarre" Brogdonian ways of 2005 and have ME [the author of the websites, LOPS and blogs] "taken out".
Firstly I have taken the usual "Pauline Hanson Personal Security" remedy here, so my death would point straight TO Abbott, but secondly it is not ME that is the problem but my websites, LOPS and blogs that are the problem. My death would simply leave all the THREAT sitting "in the cloud"
The sensible way is to simply "convince me" via the legal paths available to Abbott to REMOVE all my web content.
I obviously will not be explaining here how those paths work but by way of a Ministerial to my Local MP [the democratic method of the Constitution].
So one remaining question lingers as to is it possible "others" might come forward and do the same "whistle-blowing"?
Of course I can't answer that but I can give my estimate on the chance of that happening as being "about 1 in 5 billion".
There is nothing egotistical in the estimate but simply a statement that the Good Lord or HAL deemed [no pun intended] to give me Lucy type powers to be able to "analyse situations" well beyond the normal capabilities of J Doe, and I have used them from time to time DESPITE the detriment to my personal life.
I don't think there are any others living in Australia at present that have that burden, hence my 1 in 5 billion estimate.
In other words the term Conspiracy Theory is very commonly used to describe crackpot ideas, most without any merit in fact. But my Modus Operandi totally supports the suppositions WITH fact, so ceases to BE Conspiracy Theory.
I rest my case/SWOT.
Wednesday, December 3, 2014
Bill and Mary
A Big Super entity called Money Managers has done a better than most [but still a "One Year Wonder"] paper on Grandfather vs Deeming and here is their example.
They have not given "silly names" to this couple so we call them Bill and Mary. Further info says:
To understand the impact of the proposed change, we have considered a hypothetical couple and modelled their Government income support payments (in this case, the age pension) on different levels of superannuation.
In each case we have taken a homeowner couple, both aged 65, and with the same level of assets except for their ABP.
For the purposes of the ABP, we have assumed it will automatically revert to the surviving pensioner. The life expectancy, for the “deductible amount” calculation is 21.62 years (ie, for a 65-year-old female).
It is therefore irrelevant if the primary pensioner is the female, or the male with a reversion to his spouse.
Each scenario was modelled to firstly consider the impact on the couple’s combined age pension under the assets test, and then to consider it from an income test where the ABP commenced on or after 1 January 2015, and secondly, prior to 1 January 2015.
In each case where we modelled the income test impact based on the grandfather income testing (ie, pre-1 January 2015), we made the assumption that the ABP income drawn, less the deductible amount, plus deemed income, did not exceed the income test threshold (ie, $276.00 per fortnight).
This case stands above most as they have not simply advised the couple to use the Min Drawdown, but it seems they went for the next easiest [for them] option of match the Drawdown to the historical Interest of the Fund, meaning that when the couple are supposed to die they have exactly the same amount as they started with [to leave to "interested parties", eg the Advisor].
So using a full 20 year projection, the year #1 result of course holds throughout because the Capital remains as the elephant in the room and neither Grandfather nor Deeming have an effect via Income Testing. The total Age Pension is 86.95% of the Maximum, or $605,289 total over 20 years.
Now we say "better than most" because the results for Min Drawdown say the plan above got Bill and Mary $36,761 over 20 years extra Age Pension, for simple reason that for Min Drawdown the elephant grew bigger.
But the logical solution for the couple [ie any couple] is to USE their Super Funds for THEIR enjoyment, so we asked the LOPS to tell us how much Drawdown to deplete funds at 20 year mark [their Advisor will not be pleased]. As you would expect from all other results here, they are $65,364 BETTER off with the New Rules than under Grandfathering getting 96.36% of the Max Age Pension.
So same message here ie throw BOTH elephant and Grandfather overboard [as well as your Advisor of course] and it's the good old "we got the money".
Will clients be better or worse off?
The answer is very much a case of “it depends”.To understand the impact of the proposed change, we have considered a hypothetical couple and modelled their Government income support payments (in this case, the age pension) on different levels of superannuation.
In each case we have taken a homeowner couple, both aged 65, and with the same level of assets except for their ABP.
For the purposes of the ABP, we have assumed it will automatically revert to the surviving pensioner. The life expectancy, for the “deductible amount” calculation is 21.62 years (ie, for a 65-year-old female).
It is therefore irrelevant if the primary pensioner is the female, or the male with a reversion to his spouse.
Each scenario was modelled to firstly consider the impact on the couple’s combined age pension under the assets test, and then to consider it from an income test where the ABP commenced on or after 1 January 2015, and secondly, prior to 1 January 2015.
In each case where we modelled the income test impact based on the grandfather income testing (ie, pre-1 January 2015), we made the assumption that the ABP income drawn, less the deductible amount, plus deemed income, did not exceed the income test threshold (ie, $276.00 per fortnight).
This case stands above most as they have not simply advised the couple to use the Min Drawdown, but it seems they went for the next easiest [for them] option of match the Drawdown to the historical Interest of the Fund, meaning that when the couple are supposed to die they have exactly the same amount as they started with [to leave to "interested parties", eg the Advisor].
So using a full 20 year projection, the year #1 result of course holds throughout because the Capital remains as the elephant in the room and neither Grandfather nor Deeming have an effect via Income Testing. The total Age Pension is 86.95% of the Maximum, or $605,289 total over 20 years.
Now we say "better than most" because the results for Min Drawdown say the plan above got Bill and Mary $36,761 over 20 years extra Age Pension, for simple reason that for Min Drawdown the elephant grew bigger.
But the logical solution for the couple [ie any couple] is to USE their Super Funds for THEIR enjoyment, so we asked the LOPS to tell us how much Drawdown to deplete funds at 20 year mark [their Advisor will not be pleased]. As you would expect from all other results here, they are $65,364 BETTER off with the New Rules than under Grandfathering getting 96.36% of the Max Age Pension.
So same message here ie throw BOTH elephant and Grandfather overboard [as well as your Advisor of course] and it's the good old "we got the money".
Monday, December 1, 2014
The [DECEPTION] Case of Victoria
If you read the the Case of Margaret you will see her initial comments to us were:
"I have read heaps of articles from financial advisors most of them say the new deeming rules will mainly effect folk who have lower nest eggs."
And our comment:
"So her research confirms ours that "Big Super" is conducting a Terror Campaign to scare Pensioners to REMAIN on the so called Grandfather Rules, when that advice flies totally in the face of all the modelling we have done [which SURELY the Govt has also done and is AWARE of the deception] where indications to date show the average Pensioner stands to LOSE $50,000 or so over 20 years by taking that advice to remain on the Grandfather Rules."
To explain further about this deception, Margaret had actually sent us one such article that had her terrorised, and hence was asking us for proper advice based on 20 year modelling. Here is the hypothetical case from Affinity Wealth Services:
Case Study – Impact of Deeming on Account Based Pensions *
Victoria is 65 years of age, a single non-homeowner and has just retired. She has $300,000 in a superannuation account which she wishes to use to commence an Account Based Pension. Based on her life expectancy of 21.62 years, her Centrelink Deductible Amount would be $13,880 (i.e. $300,000/21.62). She also has $45,000 in a bank account.
Under the current rules, if Victoria draws the minimum annual income of $15,000 (i.e. 5% of $300,000), around $1,120 would be counted towards the Centrelink income test (i.e. $15,000 - $13,880). In addition, Victoria would have deemed income of $900 from her bank account. Her total counted assets would be $345,000. Victoria is under the threshold for both the income and assets test for a single non-homeowner and would therefore be entitled to the full Centrelink Age Pension (currently $842.80 per fortnight).
In contrast, if Victoria was to be assessed under the new rules, the entire $345,000 in financial assets would be deemed, equating to annual assessable income of $11,355 under the income test. Her total counted assets would remain at $345,000. When Victoria is assessed under the asset and income test, the income test now produces a lower result because of the high levels of deemed income. This in turn would reduce Victoria’s fortnightly age pension benefit to $704 per fortnight, a reduction of more than $3,500 per annum.
* Assumptions: Centrelink Rates and Thresholds as at 1 July 2014.
There are some very obvious indications that spring to the eye to say the example has been "cooked" to assist the Govt terrorising Pensioners to Go for Grandfather, and the most obvious one is that Victoria is not a home owner. Now as seen for the REAL case of Margaret, it would be most unusual that a woman who had accumulated $300,000 in Super had thrown away up to a million dollars on rent over her 50 years or so of working life.
Of less importance is Victoria does not even own a kitchen chair [to keep her Assets artificially low] but has $45,000 in the bank [to start her deeming on warm].
So by inspecting Margaret's case you can see if Victoria had contacted us and not Affinity she could have "set the sails on her ship" and enjoyed her retirement by spending her hard earned Super AND getting another $119,266 from the Govt by avoiding Grandfather [or $95,061 if Victoria was a bloke].
But on behalf of Affinity, obediently protecting the Govt interests, there will be the insinuation that we "cheated" by allowing Victoria to spend her own money, so we go around in the same legal circle.
The circle is that the Govt virtually compels people to sacrifice income over their working life "to use in Retirement". Then at 65 the Govt puts a big "Use By Date - Age 85" on the Pensioner's forehead. Then the Govt says if you DO use it [rather than just nibble at the edges] Grandfather will get out his big stick and clobber you about $100,000, and an extra $25,000 if born a woman.
So as always the circle is completed by the very legitimate legal argument that such is totally discriminatory [particularly to women] but most of all is CONFIRMED as such by the ACTION of the Govt in Amending the legislation to remove the discrimination.
So all that remains for Govt is to MAINTAIN the lie [that Grandfather is nice] for another 20 years, or they are looking at about $200 billion extra Age Pension payments, which even makes Costello's Future Fund look a little thin.
And there is another delicious irony that if Grandfather cat DID get out of the bag, the Govt would be forced to dip into the Future Fund, which would be poetic justice as it is a Piggy Bank for those who never contributed to their super in the first place.
"I have read heaps of articles from financial advisors most of them say the new deeming rules will mainly effect folk who have lower nest eggs."
And our comment:
"So her research confirms ours that "Big Super" is conducting a Terror Campaign to scare Pensioners to REMAIN on the so called Grandfather Rules, when that advice flies totally in the face of all the modelling we have done [which SURELY the Govt has also done and is AWARE of the deception] where indications to date show the average Pensioner stands to LOSE $50,000 or so over 20 years by taking that advice to remain on the Grandfather Rules."
To explain further about this deception, Margaret had actually sent us one such article that had her terrorised, and hence was asking us for proper advice based on 20 year modelling. Here is the hypothetical case from Affinity Wealth Services:
Case Study – Impact of Deeming on Account Based Pensions *
Victoria is 65 years of age, a single non-homeowner and has just retired. She has $300,000 in a superannuation account which she wishes to use to commence an Account Based Pension. Based on her life expectancy of 21.62 years, her Centrelink Deductible Amount would be $13,880 (i.e. $300,000/21.62). She also has $45,000 in a bank account.
Under the current rules, if Victoria draws the minimum annual income of $15,000 (i.e. 5% of $300,000), around $1,120 would be counted towards the Centrelink income test (i.e. $15,000 - $13,880). In addition, Victoria would have deemed income of $900 from her bank account. Her total counted assets would be $345,000. Victoria is under the threshold for both the income and assets test for a single non-homeowner and would therefore be entitled to the full Centrelink Age Pension (currently $842.80 per fortnight).
In contrast, if Victoria was to be assessed under the new rules, the entire $345,000 in financial assets would be deemed, equating to annual assessable income of $11,355 under the income test. Her total counted assets would remain at $345,000. When Victoria is assessed under the asset and income test, the income test now produces a lower result because of the high levels of deemed income. This in turn would reduce Victoria’s fortnightly age pension benefit to $704 per fortnight, a reduction of more than $3,500 per annum.
* Assumptions: Centrelink Rates and Thresholds as at 1 July 2014.
There are some very obvious indications that spring to the eye to say the example has been "cooked" to assist the Govt terrorising Pensioners to Go for Grandfather, and the most obvious one is that Victoria is not a home owner. Now as seen for the REAL case of Margaret, it would be most unusual that a woman who had accumulated $300,000 in Super had thrown away up to a million dollars on rent over her 50 years or so of working life.
Of less importance is Victoria does not even own a kitchen chair [to keep her Assets artificially low] but has $45,000 in the bank [to start her deeming on warm].
So by inspecting Margaret's case you can see if Victoria had contacted us and not Affinity she could have "set the sails on her ship" and enjoyed her retirement by spending her hard earned Super AND getting another $119,266 from the Govt by avoiding Grandfather [or $95,061 if Victoria was a bloke].
But on behalf of Affinity, obediently protecting the Govt interests, there will be the insinuation that we "cheated" by allowing Victoria to spend her own money, so we go around in the same legal circle.
The circle is that the Govt virtually compels people to sacrifice income over their working life "to use in Retirement". Then at 65 the Govt puts a big "Use By Date - Age 85" on the Pensioner's forehead. Then the Govt says if you DO use it [rather than just nibble at the edges] Grandfather will get out his big stick and clobber you about $100,000, and an extra $25,000 if born a woman.
So as always the circle is completed by the very legitimate legal argument that such is totally discriminatory [particularly to women] but most of all is CONFIRMED as such by the ACTION of the Govt in Amending the legislation to remove the discrimination.
So all that remains for Govt is to MAINTAIN the lie [that Grandfather is nice] for another 20 years, or they are looking at about $200 billion extra Age Pension payments, which even makes Costello's Future Fund look a little thin.
And there is another delicious irony that if Grandfather cat DID get out of the bag, the Govt would be forced to dip into the Future Fund, which would be poetic justice as it is a Piggy Bank for those who never contributed to their super in the first place.
The Devil's Advocate
We tried to play the Devil's Advocate for the Govt, thinking that the Allocated Pension of $200,000 we gave to Ennis and Alma was maybe not realistic, and giving the wrong impression in the results.
Alas the REVERSE is true. We increased the Allocated Pension in steps, to $300,000, then $500,000 and finally $800,000 and here are the results.
As you will see as the Allocated Pension quadruples from $200,000 to $800,000 so does the difference between the Testing regimes quadruple from about $50,000 to almost $200,000. That is to say that while the actual Age Pension over 20 years [for the RED Grandfather Squares] decreased from $650,000 down to $200,000, the GREEN Square Testing is not as severe, so the difference increased.
That is obviously NOT what the Govt wanted to find, so all the MORE reason they need to keep this all TOP SECRET to KEEP all the current Pensioners under the control of Grandfather.
If you have not fully understood the maths involved here, the example for $800,000 Allocated Pension below helps greatly in understanding the issue.
This is the New Rule Testing and you will see for Year #1 that while the Income Deeming is reducing the Age Pension from $33,000 pa down to about $22,000, the Asset Test has already nailed it down to $10,000. Then as the Capital reduces, the Age Pension gradually and linearly increases year by year to age 83 when the full pension starts to apply [albeit ABS says the Pensioner should die right there and the Age Pension end].
But for the Grandfather Rule [follow the RED Resultant Pension Line in middle graph] everything is the same up to age 75 when, Bingo, the Income Test starts to chomp in more and more till no Age Pension at all at age 85.
So our original estimate of the Govt LOSS, being some $5 billion pa if these 75 to 85 years olds get smart and get short of Grandfather, is now looking very light on and more like $10 billion pa, meaning TOP SECRET alert is almost mandatory.
So back to the SWOT Analysis to help Abbott keep his dirty secret.
Alas the REVERSE is true. We increased the Allocated Pension in steps, to $300,000, then $500,000 and finally $800,000 and here are the results.
As you will see as the Allocated Pension quadruples from $200,000 to $800,000 so does the difference between the Testing regimes quadruple from about $50,000 to almost $200,000. That is to say that while the actual Age Pension over 20 years [for the RED Grandfather Squares] decreased from $650,000 down to $200,000, the GREEN Square Testing is not as severe, so the difference increased.
That is obviously NOT what the Govt wanted to find, so all the MORE reason they need to keep this all TOP SECRET to KEEP all the current Pensioners under the control of Grandfather.
If you have not fully understood the maths involved here, the example for $800,000 Allocated Pension below helps greatly in understanding the issue.
This is the New Rule Testing and you will see for Year #1 that while the Income Deeming is reducing the Age Pension from $33,000 pa down to about $22,000, the Asset Test has already nailed it down to $10,000. Then as the Capital reduces, the Age Pension gradually and linearly increases year by year to age 83 when the full pension starts to apply [albeit ABS says the Pensioner should die right there and the Age Pension end].
But for the Grandfather Rule [follow the RED Resultant Pension Line in middle graph] everything is the same up to age 75 when, Bingo, the Income Test starts to chomp in more and more till no Age Pension at all at age 85.
So our original estimate of the Govt LOSS, being some $5 billion pa if these 75 to 85 years olds get smart and get short of Grandfather, is now looking very light on and more like $10 billion pa, meaning TOP SECRET alert is almost mandatory.
So back to the SWOT Analysis to help Abbott keep his dirty secret.
The Case of Margaret
Here is the Summary Report we sent to her.
Calculated Details and Recommendations
"Page 4 gives the results for your situation based on the so called Grandfathering Rules [herein GR]. The total Age Pension over 20 years would be $358,379 which is 77.61% of the Maximum amount.Page 5 shows the situation under the New Rules [herein NR] where the Age Pension would be $361,670 which is 78.33% of the Maximum amount. So there is little difference in the two regimes over 20 years, and no difference in Year #1 payments at about $651 per fn in Age Pension.
You will note that your elected Drawdown results in 80% of the original amount still being available after 20 years. If we ask the LOPS to Solve for only 1% left after 20 years, the amount is $19,940 pa Drawdown and Page 6 shows that result for GR at $345,116 total Age Pension ie 74.74% of Maximum.
However the NR on Page 7 shows the total Age Pension as $413,394 ie 89.53%, which is $68,278 MORE than for the GR situation.
It will be clear that this big difference is because the NR operates on Capital remaining in the Allocated Pension Fund, whereas GR is based on the Drawdown amount.
Therefore removing the CPI provision should improve the result more and Page 8 shows for NR that a Drawdown of $26,074 gives $425,834 ie 92.22%, an extra $12,440 over the CPI result. The GR result is still down at 80.93% so is not printed out.
All of this indicates that you will be better off under the New Rules for all situations."
So to explain this step by step
As you can see the RED portion for Year #1 [ie 65] is in fact very small as the One Year Wonders are all telling us, but just look at how "with Grandfather the Sting is in the Tail" kicks in as she gets to 75 or so.
The above is for Grandfather Rule Testing and it is totally plain to anyone but a One Year Wonder Advisor that the Elephant in the Room IS the CAPITAL of the Allocated Pension, which has dropped Year #1 Age Pension from the Max of $21,988 to $16,980, with Income Test not even getting a look-in. In fact Income Test only takes over at age 83 as you can see [where the GREEN Triangles cross below the YELLOW Triangles].
This is for the New Rule and the One Year Wonder Advisors are correct in saying IF Income Testing gets the nod then Margaret's deemed Allocated Pension Capital has gone from a mouse to a horse. The trouble is that the ELEPHANT still remains as the ASSET Test [for all 20 years].
In fact even if we asked Margaret to give away her car and the rest of her $30,000 Assets, we see above that the Capital of the Allocated Pension ALONE still gets the nod over Income Testing, so there is no excuse for the One Year Wonders to be scaring the Bejesus out of nice old folk. Ironically the only time that would not be so is if [as a result of the bad advice] the poor old Pensioner has to get a part time job to make ends meet.
So even a 6 year old with limited maths understanding would be able to see that the solution [except for Grandfather, quarantined in povety] is simply to get RID of the elephant as quickly as possible. To us, the thinking goes like this - the Govt expects you to die at about 85 and no longer pay you a cent in Age Pension so why not call its bluff and plan to use all your Allocated Pension AT 85, then if you live longer you should be getting 100% Aged Pension.
To that end we have turbo-charged the LOPS to do a macro driven Solver task that can tell us within about 30 seconds just how much to Drawdown to accomplish that.
As seen, the YELLOW Capital runs out at 85 using the LOPS solution of Drawdown of $19,940 for Year #1. But those RED Grandfather columns are not looking good.
And we were also prepared for the GOOD news of the New Rules where the more we shaved off the elephant the more BOTH GREEN and YELLOW Triangles contracted upwards, giving 100% Age Pension by about 78 [and 89.53% for the whole 20 years]. As we reported to Margaret "$68,278 MORE than for the Grandfather Rule situation".
Conclusions
Margaret now has the benefit of proper professional advice based on full 20 year modelling of her situation and options. Her initial comments to us were "I have read heaps of articles from financial advisors most of them say the new deeming rules will mainly effect folk who have lower nest eggs."So her research confirms ours that "Big Super" is conducting a Terror Campaign to scare Pensioners to REMAIN on the so called Grandfather Rules, when that advice flies totally in the face of all the modelling we have done [which SURELY the Govt has also done and is AWARE of the deception] where indications to date show the average Pensioner stands to LOSE $50,000 or so over 20 years by taking that advice to remain on the Grandfather Rules.
We assume Margaret will take our advice and put the $68,278 in HER pocket and we hope that she will Twitter, Twotter, Tweet and Facebook this good news to Pensioners all around Australia, and that they too will act to DEFEAT this Govt ploy, to show Abbott that just as for his mentor Howard 10 years ago that Australians do not take kindly to being lied to and taken for a ride by their Executive Government.
Case of Ennis and Alma Revisited
In the SWOT Analysis Post we tabled and "Closeted" the image from our 2009 dated website which we have postulated as the REASON that the Executive Government of that time decided they NEEDED to legislate changes to Age Pension Testing, which changes have been Senate Approved for commencement on 1 January 2015.
Here is that image
As we mention in the SWOT Post, the RED Columns were slightly exaggerated because:
" ...we had thought the legislation said to divide the remaining Capital by the revised Life Expectancy every year, whereas we have now fixed that to divide START Capital by START Life Expectancy, so the effect on the Pensioner is not as bad as in the black closet, BUT obviously the Govt has done its new modelling on the proper Rule and STILL considers the result a PROBLEM."
So to set the record straight we have gone back to the [simulated] case from 2009 and reconstructed the very similar Plan B situation, but having now done the fix for the RED Columns [which of course only apply for the Grandfathered Rule]. PLUS of course we can now do a comparison to the New Rule.
In fact the RED columns are probably every bit as bad as those in the Closet, but simply more linear.
So Ennis and Alma are $46,394 BETTER OFF if they simply "sweep" their 2009 Allocated Pension to a new Account Based Pension, meaning they then come under New Rules and escape Grandfather.
Here is that image
As we mention in the SWOT Post, the RED Columns were slightly exaggerated because:
" ...we had thought the legislation said to divide the remaining Capital by the revised Life Expectancy every year, whereas we have now fixed that to divide START Capital by START Life Expectancy, so the effect on the Pensioner is not as bad as in the black closet, BUT obviously the Govt has done its new modelling on the proper Rule and STILL considers the result a PROBLEM."
So to set the record straight we have gone back to the [simulated] case from 2009 and reconstructed the very similar Plan B situation, but having now done the fix for the RED Columns [which of course only apply for the Grandfathered Rule]. PLUS of course we can now do a comparison to the New Rule.
In fact the RED columns are probably every bit as bad as those in the Closet, but simply more linear.
Grandfather Rule Testing
The above shows how the Income Testing of Grandfather Rule start to bite at about 70 years of age and get worse all the way to 85. The total Age Pension is $649,736 ie 93.34% of the Maximum.New Rule Testing
Under the New Rule the deeming of the Capital almost cuts in for Year #1 and after that keeps diminishing along with the Capital itself. The total Age Pension is $696,130 ie 100.00% of the Maximum.So Ennis and Alma are $46,394 BETTER OFF if they simply "sweep" their 2009 Allocated Pension to a new Account Based Pension, meaning they then come under New Rules and escape Grandfather.
Legal Issues
Gender Issues
The 1999 movie American Beauty portrays the so called "Beauty" in America 29 years after the TAKEOVER by the small f feminist "sisterhood" in 1970.And it is a very sore point with older Australians that it was the "Femi-Men" [or SNAGs as they were termed] of the day back in 1970 that allowed Germaine Greer to spread her dogma of her book "The Female Eunuch" throughout the world, including America, thus creating the American Beauty.
By 1973 the sisterhood mania was so implanted that Grandfather had become Grandperson for a short time.
But the mania subsided as the sisterhood realised they had more to lose than to gain and the big one was that the sisterhood could retire at 60 while mere men had to wait until 65. It took over 20 years for a Prime Minister with balls in Paul Keating to say to the sisterhood "you want equality, you will GET equality", and another 20 years to stage the equality into the legislation.
But in the latest example we did with the LOPS for Margaret [not her real name of course] simply changing her from a F to an M says that, but for being "born a woman", she would get $20,000 MORE over 20 years in Age Pension.
The delicious irony here is females are penalised under the Grandfather Rules simply because the ABS says they live longer, but one of the reasons that is the case is the very high number of male suicides as a result of the instruments OF the sisterhood, being the Family Court and Child Support Agency.
But leaving that aside why should an individual female have her Age Pension reduced simply because her gender lives longer. So possible [or currently adjourned?] court application #1.
Discrimination Issues
If you look at the effect of the Grandfather Rules in the later stages of a Pension it is easy to see WHY a Pensioner could lose some $50,000 in Age Pension [see Post "The Jury is OUT on Grandfather"] over 20 years. The algorithm generates a fixed [non indexed] amount that is applied for all years [even after the date on which you were expected to die].On the other hand the Grandfather Rule [and New Rule it seems] says the Minimum Drawdown percentage increases over the 20 years [and keeps increasing after that], meaning that regardless of wanting to increase your payments [usually by a built in CPI amount] or being forced to do so, the Pensioner is penalised, AND all of that has been REMOVED under the New Rule.
So there is the big clue as to WHY the changes have been made, ie to get rid of the discriminatory aspects of the Grandfather Rules. The New Rules simply Test the Capital remaining in the product [same as for the Asset Test] and leave the pensioner free to choose the Drawdown year by year, and I think there is a very good chance that such an application HAS been made in court and is being "indefinitely adjourned" while the Legislature furiously fix the holes in the dyke, ie possible [or currently adjourned?] court application #2.
Of course such a precedent case [if won] can have HUGE financial implications for a Govt, ie the Open the Floodgates issue, and it is ironic that Abbott's mentor Howard went through this same issue 10 years ago with the out of control Child Support Agency being brought to heel by court applications.
Howard brought in his Heywood Floyd look alike in Professor Parkinson to REMOVE access to "a day in court right" while covering over the dirty work with a shiny new formula, so we have the same devious WMD type manipulations going on here with Abbott.
The other clue is the recent manipulation of the "reversionary rights" to remedy [after changes to legislation] by the repeal of s 8 of the Acts Interpretation Act [1901].
But as for Howard, Abbott is covering his tracks very cleverly here AND at the same time is creating a 9/11 style Terror Campaign to induce/force Pensioners to stay ON the Grandfather Rules and allow those ill gotten billions of dollars to be denied to Pensioners for another 20 years.
As always there is no way to ever prove these matters because as for Heywood Floyd [Kubrick's adaption for Wayward Fraud] and his Piltdown Man Fraud, the details are buried deeper than Floyd's moon monolith.
The bottom line as always remains with Hitler and "It is most fortunate for governments that the people do not think".
BUT in this case remedy does not NEED a court case [rather, just the act of thinking, after reading this Post], but simply an election by the Pensioner to "sweep" their product and thus invoke the New Rule. And here is the other delicious irony of the situation that it is the very fact that a Pensioner HAS that option that will STOP any court actions against the Grandfather Rule operation. That is to say Abbott has been forced to give the Pensioner an option to go to the New Rule, so has to resort to Terror to maintain them on the Grandfather Rules.
So we have the good old Sword of Damocles situation with the Sword being held up by the [Eyes Wide Closed] Political Correctness induced by the small f feminist takeover that says people will always take their "right to Twitter their bile" over their right to Justice [if that involves actually thinking].
On the other hand he can always revert to his "throwing Pensioners overboard" solution he had at the time of Howard's children overboard gig, ie as Health Minister his plan was to deny the vaccine to Pensioners for avian flu, per:
TONY ABBOTT: "If you are to see on the front page of the newspaper headlines such as: "50,000 dead", or "50,000 to die", obviously people are going to start thinking the worst.
On the other hand, if you work out that that translates to something like a one in 500 risk of succumbing to a flu pandemic, I think you are able to put it into a different kind of perspective."
The Jury is OUT on Grandfather
The Explanatory Memorandum for this amendment is claiming a $160 million benefit TO the Govt, but strangely [even for Abbott] has declined to give any reasons at all, meaning the EM is worthless except for the clue of the $160 million.
And all the loyal "One Year Wonder" consultants are finding that FOR that year #1 Grandfather Rule "Rules OK".
But for all the true and hypothetical cases we have run through the LOPS to date Grandfather REALLY has whiskers over 20 years, because "with Grandfather the Sting is in the Tail", from about 75 to 85 for most folk.
But while the One Year Wonders don't [by definition] do modelling one has to assume that the Govt DOES, and it seems they are telling big porkies about the real situation.
From our test cases so far it is looking like the average pensioner or couple could [with a proper plan] be $50,000 or so BETTER off if they can escape from Grandfather and use the New Rule.
That means two things, firstly the savings to the Govt will come from the Terror campaign to KEEP people Grandfathered and secondly that the true savings will [save for whistleblowing, eg 75 year olds just reading this blog and DE-Grandfathering] be MUCH more than $160 million - nor would it end in 4 years time.
But we must remember that as huge as these "savings" are, they are already IN the Govt Piggy Bank Budget, and the REAL danger is that if all these 75 year olds got smart and "swept" their products to go under New Rule there would be a huge LOSS to the Govt, of many BILLIONS. So same as for Rummy, the WMD Genie had to stay IN the bottle or no Iraq war and no oil.
So that begs the question of why MAKE the amendment in the first place? - and our guess is the normal "legal reasons". So let's move to that.
And all the loyal "One Year Wonder" consultants are finding that FOR that year #1 Grandfather Rule "Rules OK".
But for all the true and hypothetical cases we have run through the LOPS to date Grandfather REALLY has whiskers over 20 years, because "with Grandfather the Sting is in the Tail", from about 75 to 85 for most folk.
But while the One Year Wonders don't [by definition] do modelling one has to assume that the Govt DOES, and it seems they are telling big porkies about the real situation.
From our test cases so far it is looking like the average pensioner or couple could [with a proper plan] be $50,000 or so BETTER off if they can escape from Grandfather and use the New Rule.
That means two things, firstly the savings to the Govt will come from the Terror campaign to KEEP people Grandfathered and secondly that the true savings will [save for whistleblowing, eg 75 year olds just reading this blog and DE-Grandfathering] be MUCH more than $160 million - nor would it end in 4 years time.
But we must remember that as huge as these "savings" are, they are already IN the Govt Piggy Bank Budget, and the REAL danger is that if all these 75 year olds got smart and "swept" their products to go under New Rule there would be a huge LOSS to the Govt, of many BILLIONS. So same as for Rummy, the WMD Genie had to stay IN the bottle or no Iraq war and no oil.
So that begs the question of why MAKE the amendment in the first place? - and our guess is the normal "legal reasons". So let's move to that.
Are You being Diddled $50,000* BY Grandfather
As all Pensioners and soon-to-be Pensioners are being made aware, on 1 January 2015 a "divide" is driven into the Testing Rules for Age Pensions, and the term "Grandfathering" is being used to refer to the pre amended Rules, though this is more commonly called "Legacy".
So, predictably [as it IS post 9/11] the Govt and loyal "pension consultants" are using the Rummy "Terror Attack" method of "Unknown Unknowns" with the New Rules as the WMDs. And given Abbott used Howard as his mentor we can't really be all that surprised.
At agepensionsolutions-dot-com [not dot-com-dot-au] we use a fully engineered speadsheet application [called the LOPS, Little Ozzie Pensioner System] to give you the exact solution based on 20 years [or more] for your unique situation.
But so far our assessments for both hypothetical and actual cases say ONCE you do the sums over the FULL period, then Grandfather DIDDLES you of an average $50,000*.
Or simply ask yourself WHY would a "person" like Abbott be using his loyal media to convince you [always based on ONE year only] to STAY on Grandfather Rules?
Are you too being diddled of $50,000*? - please click for a Free Ballpark Assessment
*As you will see from subsequent Posts, this is looking more like an average $100,000 over 20 years loss of Age Pension by STAYING on the Grandfather Rules.
So, predictably [as it IS post 9/11] the Govt and loyal "pension consultants" are using the Rummy "Terror Attack" method of "Unknown Unknowns" with the New Rules as the WMDs. And given Abbott used Howard as his mentor we can't really be all that surprised.
At agepensionsolutions-dot-com [not dot-com-dot-au] we use a fully engineered speadsheet application [called the LOPS, Little Ozzie Pensioner System] to give you the exact solution based on 20 years [or more] for your unique situation.
But so far our assessments for both hypothetical and actual cases say ONCE you do the sums over the FULL period, then Grandfather DIDDLES you of an average $50,000*.
Or simply ask yourself WHY would a "person" like Abbott be using his loyal media to convince you [always based on ONE year only] to STAY on Grandfather Rules?
Are you too being diddled of $50,000*? - please click for a Free Ballpark Assessment
*As you will see from subsequent Posts, this is looking more like an average $100,000 over 20 years loss of Age Pension by STAYING on the Grandfather Rules.
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