Angry Aussies: What to do when politicians change the money rules

RETIREES are angry amid rule changes to pensions, superannuation and Labor’s plan to strip tax refunds from franking credits. So how do you handle moving goalposts?

RAGE is all the rage in letters to the editor pages right now, as readers vent their anger at politicians playing with their retirement savings again.

They’re mad about Labor’s plan to strip cash from self-funded retirees by scrapping tax refunds attached to their share dividends.

Much of the frustration comes from people who worked hard, saved more than average, and planned a retirement where they didn’t have to rely on government handouts.

But now there’s more talk of moving the goalposts.

Labor says it is targeting the rich, but the truly wealthy won’t feel any serious financial pain.

Not happy, Jan. Labor’s tax plans are angering may self-funded retirees.

The real victims are those with good-sized nest eggs — perhaps between $300,000 and $800,000 combined — who lose thousands of dollars that they planned to be earning.

Some are telling their kids not to bother saving for the future because the government grabs your hard-earned cash anyway. Others are thinking about blowing all of their money on overseas holidays, after which they will just go onto a pension and not have to worry about rule changes for the so-called rich.

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Bureau of Statistics figures show that just 21 per cent of Aussie retirees are fully self funded. Fifty-two per cent receive a government pension only while 27 per cent get some of both.

Labor is fuelling a dangerous class war, but is not alone in moving the goalposts. The Coalition government last year tightened the age pension assets test for more than 330,000 retirees, and introduced a pile of superannuation rule changes that make it tougher to pour money into super.

Don’t take your financial frustration out on your computer. It will only hurt.

Whatever government we have, the rules will keep changing, so we need some strategies to handle them. Here’s a few ideas:

• Get the timing right. Most government rule changes give people a preparation period. Many rules are grand-fathered, which means they only affect newcomers, so if you think a change is coming be prepared to act early.

• Educate yourself or get advice from professionals. Now is not the time for heads in the sand.

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• Diversify assets, which means you shouldn’t suffer a massive hit when the rules change in one area of your finances. Aim to build wealth inside and outside of super, through Aussie and overseas investments, and with both conservative and higher-risk assets.

• Look for alternatives. Rule changes often leave loopholes. For example, Labor’s plan to scrap negative gearing on investment properties doesn’t affect new housing, so there’s an option for investors. Government cuts to the pension assets test didn’t affect the Commonwealth Seniors Health Card and its cheap medicines, travel and other discounts.

And don’t give up. Many recent and proposed changes are simply returning the system back to where it was before the mining boom in the 2000s filled Canberra’s coffers with extra cash.

Australia still has a generous tax and superannuation system and a good pension safety net by global standards.

Angry, knee-jerk reactions to rule changes may wipe out your wealth faster and are not the best way forward.

@keanemoney