De-coding Murray Report Example

As we mention the Murray Report is of course "coded" in order to fulfill its role of creating the illusion of activity and concern by the Govt but at the same time not actually CONCLUDING anything that could come back to bite them at election time.

So the closest the Report gets to an example to explain the "Weasel Words" [as Don Watson calls them] is this graph which shows how 3 different CIPRs [please read the Report if you really want to know what this particular Weasel Word might mean] might work by comparison to the strategy used by "most Pensioners" [on the advice of BigSuper] to simply use the Minimum Drawdown of an Account Based Pension [formerly Allocated Pension].

The first thing to note is the Freudian Slip via "excludes Age Pension".  That comment simply reiterates the message that the Terms of Reference of the Report excludes any reference in the Report to Age Pension [which of course makes the whole Report worthless].  So what this meant to say was "the income streams shown do not include any Age Pension to which the Pensioner may also be entitled to".

The SLIP is that the [unspoken] truth is that the Govt WANTS to exclude Pensioners from the Age Pension once they reach the 85 year mark in the graph above, but unless they change the legislation [by another "grandfather trick"?] the Pensioner would get the $25,000 pa shown above as well as about $22,000 pa in Age Pension.  So it is very convenient for Mr Murray that he does not need to inform us of this fact.

To very briefly explain the strategy being touted above, Justin [as we shall call him] has $400,000 in Super at age 65 and the Govt wants him to put aside $100,000 or so of that into an "insurance fund" in case he lives past 85.  Then he fully exhausts the remaining $300,000 by age 85, hence the income stream lines above simply continue on at the same "smooth" level to age 100.

Of course the Report tells us nothing of Justin's details except he is a male of 65 and has $400,000 in Super, so we will assume some facts [eg Justin is a homeowner and his Fund returns 8% pa].  We then do two examples, one similar to the "dotted line" one above for Min Drawdown and one exhausting his Super at age 85 [ALL of it, ie no insurance policy].

But here we differ dramatically from the Murray Report method [same as BigSuper] in that our LOPS shows EVERYTHING, including Age Pension, and if you avail yourself of our service, our Report to you will be based on your EXACT circumstances.

LOPS is of course a satirical jab at the Govt propensity for acronyms in their Weasel Words [eg the latest one of CIPRs] and simply stands for Little Ozzie Pensioner System [ie for the Little Ozzie Battler, that classic Australian entity].

In the top figure Justin is taking the advice of his BigSuper adviser and Drawing down the minimum amount and as you can see is living frugally on just $20,000 pa to start, the very time when his health still allows him to do the Grey Nomad tour around Australia, but alas he is short on funds.  If he lives to 95 he will be getting $70,000 but that will be of no use in a nursing home.

In the lower figure Justin takes Our Advice [using the LOPS at ozpensions.info] and will get DOUBLE that at $40,653 [the amount the LOPS calculated to exhaust his Super at age 85], so he can now afford to take as many trips as he wants till the wheels fall off his caravan or himself.

And because the Fund Fees are based on the account balance, he saves $37,017 on fees over the 20 years.

But you are already thinking that his large Drawdown of $40,000 pa must surely reduce his Age Pension and prior to 1 Jan 2015 you might be right, but Justin comes AFTER the evil curse of Grandfathering.

A comparison of the two "C. Testing for Aged Pension" figures above shows that it is Justin's Assets [ie NOT his deemed income] that determines his level of Age Pension and simply by gradually EXHAUSTING the capital he goes from 35.37% to 80.14% over 20 years, an increase of $206,657.

Then if we compare the two "D. Combined Income Stream" graphs we see Justin has gone from a 20 year income with an average of about $40,000 pa to one of about $60,000 pa, a total increase of $413,755.  His Year #1 income is a tax free $53,134 and the LOPS tells Justin that that is equivalent to a taxable income of $63,193.

But you say that IF he lives past 85 he will be back to just the Age Pension.  That is so but if you refer back to the brand new "solution" by the Govt at the top of the page, that was ALL he was going to get past 85 ["excluding" any Age Pension, however you may wish to interpret that Freudian Slip].

Finally it would be "intellectually dishonest" not to look at the Grandfathering situation, so here it is:

The result is that Justin would be worse off by $72,163 over 20 years if he had started his retirement prior to 1 Jan 2015 and remained convinced by BigSuper that he should REMAIN with Grandfather Rules [rather than sweep his product for a new one].

So we see yet another example to demonstrate just WHY the "Grandfather Amendments" were introduced in such a clandestine manner, and then "spun" by BigSuper as "Grandfather is GOOD, New Rule is BAD".

Ongoing Personal Security Update

It is some 10 weeks since I tabled my Ministerial with Canberra about the Grandfather Fraud and things are happening, though "unofficially".

Obviously the Abbott Goons do not have the sway with Google they may have expected to delete my posts, so I will continue to use Blogger to secure my safety.

The first "strange happening" was that I had a new customer who was a little old lady who was being screwed by Big Super and was much in need of help.

Our Report to her "went astray" and then the little old lady herself "went astray".  Now given her stated state of "very tired" having to keep working at 67, it may be possible she is in hospital or died, BUT when that is coupled with an Australia Post item neither reaching its target in 2 weeks or being returned to sender, we are looking at a serious situation.

The second "strange happening", right on top of the Abbott announcement of using the excuse of "kiddie porn" to cause our ISP to "rat on us", I GOT one of these attempts to "do a Rolf Harris" on me.

The person who contacted me "out of the blue" was Randy, a "damaged by Family Court" man who fled America to live in the Philippines in 2001.  I was presented with a purported "travel site" [which the Abbott Goons know is of interest to me] but it simply loaded a swag of what the Goons call "kiddie porn" onto my computer.

Here is the site and you can see that Randy is very fond of young Filipino kids, but that does not make him a pedophile in a "normal society" like the Philippines where Randy is doing one hell of a lot of good for these poor folk from his meager Pension.

But as we know, in an Australian or American trumped up "court situation", simply having these photos on your computer is enough to have you put away for life.

SO I deleted all reference to Randy from my computer, meaning I now await the next attack by the Abbott Goons.

Dear Google, How much Super do I need?

To confirm the self seeking belligerence of BigSuper as we saw in Mary's Case, we Googled that question and the top entry was for a well known Telco Fund [name withheld for privacy reasons].

As expected the website was advising that a single retiree at 65 [Let's call him Terry of Tel----] needed an income of $50,000 pa to live "comfortably" and that that equated to capital of $700,000 in his Super Fund by 65.  They boast of an historical investment rate of 9.89% but we have cut that back to 8% to be conservative.

Firstly they of course mention the "impossibility" of living on the Age Pension

"The Age Pension is currently set at 29.4% of Average Weekly Earnings for a male (a maximum of around $427 a week for singles and $644 a week for a couple)."

What they don't say is Terry will have no mortgage/rent, tax, cost of raising kids or "employment costs", and may find $427 to be quite adequate for his retirement lifestyle.  Terry simply likes fishing and not taking 2 boring Rhine River Cruises per year [and risking being attacked by a ''gay divorcee lady'' after his hard earned money].

Now as you can see Terry is told to Drawdown $50,000 pa which is a bit more than the Minimum Drawdown of $35,000 pa, but not much.  At the conservative 8% Growth Rate figure, if he died at 85 [2 years past his Life Expectancy] he would still have about $800,000 left - ie more than he retired on.

So the Fund has him retiring on $960 pw, which just happens to be [only] double the Age Pension rate, ie the rate had he kept the whole $700,000 [not paid any Super] and put it into his home [which of course does not enter into the Centrelink calculations].  The big loser would be BigSuper as just for the years 65 to 85 their fee would be about $115,000, but that's not Terry's worry.

But if Terry came to us, having already retired with $700,000 Super we would suggest he actually USES it and would tell him that an income of $71,134 pa [$1,367 per week - more than THREE times the Age Pension] would exhaust his funds in 20 years.  Alas the Fund fees would drop by $47,000 but as for Mary, that is not Terry's problem.  Terry can now take 4 boring Rhine Cruises a year, but he really just wants to go fishing.

Of course the advisors have looked Terry straight in the eye and explained they are doing this in ''his own best interests'', citing ''market uncertainty'' as the bogey man.

So let's backtrack to see WHY Terry sacrificed ''leisure etc'' during his life to accumulate this huge $700,000 of Super.  The website starts by throwing up numbers as to why Terry will need this amount and if we just consider ''leisure, clothes, transport'' they are saying he needs $450,000 over 20 years to ''get by''.

The great irony is that young people of today are being convinced they can not afford to take that backpacking "Grand European Experience" that was simply part of  vital ''life experience'' in the 1960s and 1970s because they need to put the money into Super.  But then when they are old and perhaps in a wheelchair with no advantage to be gained from that Rhine Cruise, they are being told they must do it as they mortgaged their lives away to HAVE it.  And the Funds rub their hands in glee as another sucker takes the bait.

The bottom line is there is a happy medium somewhere between the Fund plan for Terry and simply the Age Pension, and as for last 30 years or so with compulsory employer contributions it is impossible to have no Super at all unless you lose the shirt off your back in the lousy Family Court.  So let's assume by paying nothing himself Terry ended up with the same $200,000 as in Mary's case [but now with 8% investment rate].  It is not important if he or the company paid the $200,000, but simply that it is $500,000 LESS than the Fund Plan.

We now use the LOPS once more to find that if Terry Draws Down $20,327 pa he will exhaust his capital in 20 years.  Doesn't sound a lot until we find that for Age Pension he goes from a big fat ZERO for the Fund Plan to $428,591 over 20 years, a massive 92.82% of the Maximum Age Pension.

So his total Income Stream is now $803 per week, which is 84% of what the Fund said he needed, or exactly one less boring Rhine Cruise a year [which Terry didn't want anyway].  But as for fishing, the extra $500,000 invested into his home would not only have given him a luxury swimming pool but a fully stocked barramundi pool as well.

And as you guessed, the fees to his Fund over 20 years are reduced by $86,846.

Terry may of course have ethical/ego reasons as to why he would not want to "resort to accepting money from the government", but in all our time helping retirees we have never found a person with such ideas, but rather the opposite in millionaires, indignant they are not "recouping their hard earned tax dollars".

So the message to those younger folk is simply plan YOUR retirement on YOUR needs and not those trumped up by greedy BigSuper.  You will probably find that the employer contribution is quite adequate.  Simply do the sums yourself.

Why we have TOO MUCH Super

We are hounded by BigSuper from the day we start work to sacrifice all manner of things [eg leisure] to build up a huge "nest egg" of Super for our retirement.

Then when we do retire we are scared out of our pants by BigSuper to not USE it but Drawdown the Minimum Amount to keep accumulating our asset, so we live "frugally" [as the Murray Report assesses] and die with more Super than we retired with.

In this instance I use the term BigSuper as including the major "stakeholder" of the Government itself, because as we will see the Super Industry and the Government work hand in hand to make your life a misery, and I will explain the numbers via the case of Mary, the latest casualty seeking help from agepensionsolutions.com.

Mary is 67 and has been caught in a Negative Gearing trap by her "Financial Advisors" whereby because of falling property prices she is unable to sell her investment properties at a reasonable price [to not make a big loss] so she must keep working full time to keep the NG myth going hence is missing out fully on Age Pension.  She is tired and sick and is obviously headed for an early grave if she can't get out of this vicious cycle.

Her only option is to sell at "fire sale prices" and cut her losses, but she is worried if she can possibly live on what she has been told by her advisors to be "insufficient income for her twilight years", but is code for "we won't make enough out of you".

Mary was looking at retiring with $300,000 in Super but was told she needed more and the NG plan was expected to boost that to $450,000.  So we have done the sums for her to either come out even from the NG fiasco at $300,000 or sell at "super fire sale" prices and come out with just $200,000.  Here is the Report.

This is Report #3 and explores the difference between having $300,000 in                  
Super and having $200,000.  In both cases the Allocated Pension Drawdown                  
is calculated so as to fully exhaust the capital at 20 years, without any CPI                  
increase/decrease used.  Page 4 shows result for $200,000 with an annual Total                  
Income of $35,459 (for Year #1).  The total Age Pension over 20 years would                  
be $431,534.  Page 5 shows results for $300,000 with an annual Total Income                  
of $40,237 (for Year #1).  The total Age Pension over 20 years would be                  
$387,475. The "bottom line" is therefore that by doing a "fire sale" of your                  
investment properties and retiring on $100,000 less in Super, your weekly                  
income would drop from about $770 to about $680.  So there would be a $90                  
(9%) per week drop in your total income but factored into that is the fact you                  
GAIN $44,059 in Age Pension, meaning your overall "loss" of $100,000 in                  
Super starting capital by virtue of the fire sale option is in fact reduced to                  
$55,941, because of the GAIN in Age Pension.  To complete the picture we                  
can revisit the "pipe dream" plan you were sold based on negative gearing,                  
promising to give you an extra $150,000 but in fact being a financial disaster                  
and albatross aroung your neck preventing your retirement. If it had worked                  
your weekly income (using the normal Min Drawdown of "advisors") would                  
have been about $590, and you would have LOST $270,155 in Age Pension.                  
Our recommendations are therefore to "cut your losses" and retire, because                  
even $680 per week is most adequate for a retired person with no                  
mortgage/rent or "cost of employment" expenses. 

Now you will be asking why on $200,000 she would get $680 per week and on $450,000 she would only get $590 per week?  As already explained above and in the Murray Report, BigSuper scares Pensioners into taking just the Minimum Drawdown, so even using a very conservative 6% investment rate Mary would still have $418,500 left if she reached her "batting average" of 87 [but more likely about $600,000].

So that answers the Government portion of BigSuper reason, ie she gets $277,155 less in Age Pension.

But of course the Murray Report was a Politically Correct "wallpapering" document so was not allowed to mention that aspect OR the fees charged by BigSuper so we added a fee calculator to the LOPS.  Of course most of the fees are based on a "per $1,000" basis so the last thing a Fund wants is for the Pensioner to REDUCE the capital.

And to put dollars to that scenario, for the $200,000 case the fees for 20 years would be $27,155, but jumping to a massive $82,276 for the $450,000 case - case CLOSED at $55,121 extra for the Fund side of BigSuper and a total of $332,000 or so LOSS to Mary.

And not to mention that as Murray says, Mary may have lost her "cognitive skills" by then and not allocated her capital to anyone, meaning $600,000 goes into BigSuper "Never Never Land", never to be seen again.

Now read the next post to see how this rip-off works for a typical BigSuper Agent.

Grandfather Outpaces the Murray Report

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.

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.

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.

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:

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".