Superannuation Disability and Insurance
Tuesday, 15th April 2014 – 1:30 pm
Coversation topics
Adam Tayler, our Superannuation and TPD expert discusses with Chris Smith from 2GB the implications of the possibility of the increase of the pension age to 70. He also answers questions from callers regarding claiming lump sums from superannuation accounts following an injury and illness and what to do if your claim for a superannuation payment has been rejected.
If your claim to access your superannuation early has been rejected or the payment you have been given is inadequate, give Adam a call on 1800 088 677 or via our online form. You can also refer to our Superannuation and TPD section of our website for more information. You can find more podcasts by Adam on our Media Centre section of our website.
Click here to listen to Adam’s podcast or alternatively read the Transcript below.
*** Transcript ***
| Chris: | Our Turner Freeman Lawyer Adam Tayler talking about superannuation |
| Chris: |
Both today and yesterday we have been talking about the Possibility of the government raising the age of entitlement for the aged pension to 70. |
| Chris: | As we heard of Dennis Baker, job seeker expert, this can provide an employment for over 50′s who are already have a hard enough time to get a job. |
| Chris: | Another important aspect of the potential of raising the retirement age is our ability to keep working until our old age. |
| Chris: | As a suggestion is that old workers can be left vulnerable if they are injured or ill. Let’s hope that is not the case that we still need the safety net. Currently if you are 60, the insurance payout is between $25,000 and $35,000 which is not going to cover you for the next 10 years. Clearly something else the government needs to think about. |
| Chris: | But where does superannuation go from here? Will we find that employers contribute more. It’s something that you would hope would occur if we’re raising the retirement ago to 70 and beyond. |
| Chris: | Adam Tayler from Turner Freeman Lawyers specialises in superannuation and disability claims also and he joins me on the line right now. |
| Chris: | Adam, good afternoon. |
| Adam: | Good afternoon Chris. |
| Chris: | Thank you very much for your time. |
| Chris: | For those with superannuation questions, it can be about superannuation, what you should be doing now as a result of these announcements with your superannuation, superannuation fund. Maybe a disability claim that you have lodged and you’d like to know a little bit more about your rights, Adam is your man. |
| Chris: | Now Adam, the prospect that the government changing the age of the pension, firstly it won’t affect people that are already getting the aged pension will it? |
| Adam: | ou would expect now Chris. Of course we’re all speculating about the government what it may or may not do, come the budget in May. But clearly there will be other flow on effect the retirement age is lifted. One of which is how older Australians can access their superannuation and any insurance benefit sitting behind it. As you mentioned before that average types of insurance is quiet small. And that’s because people’s expectations at the age of 64 or early 60s is that you’re expected to retire pretty soon. But the government is expecting you to work for another 10 years or longer; $25-$35,000 is not going to cut it. |
| Chris: | No it’s not. So do you think, will we see situation where there will be less of a limit to when you can access your superannuation? |
| Adam: | The government clearly wants us to look after ourselves and look after themselves longer, so they may need access to their superannuation. |
| Adam: | I think they will look at one of 2 things. Either they will relax the early access restrictions to those who are seriously injured and can’t work, or they need to bolster the insurance arrangement that sit behind the super. Those people who are basically in a position to, you’ve mentioned earlier that people who are moving or changing careers late in life, are vulnerable and need protection. |
| Chris: | But the earlier option you suggested doesn’t cost the government nearly as much as what it would cost the government to increase disability claims payments. |
| Adam: | The insurance arrangement is not something the government of the tax payer are providing, it’s not a safety net … |
| Chris: | It’s a private insurance companies. |
| Adam: | Private insurance companies who have their own arrangement with their Adam: superannuation trust funds. It’s not a government impost that to strengthen those arrangements. Certainly in relation to early access super, people accessing their own retirement savings. |
| Chris: | So at the moment we have employers contributing to superannuation, can you see the gradual increase of the bottom limit of that moving from 9% up to higher amount? If you are in the public service set up, I think the government pays about 12%. Will we get to a stage where in an effort to ensure that they pay their own way and not rely on the aged pension as much as they are. Will we see those contribution rise and rise? |
| Adam: | I think we will Chris. I think it’s inevitable that as time marches own these contribution increase. I think what the government need to look at is the ability for people to co-contribute to their own retirement savings and the tax brackets are available to do that. |
| Chris: | So some kids of compulsory minimum contribution? |
| Adam: | I wouldn’t suggest the compulsory contribution but I think some incentives to enable people start thinking about these things earlier and saving more. |
| Chris: | Something you need to get young people considering when they’re in university or when their in school and getting their first job. Don’t they really. |
| Adam: | I agree with that Chris. I think that’s a hard task. At that young age we’re not thinking about what we’re going to do when we retire. Trying to start our careers. |
| Barry is on the line. | |
| Barry: | I just have a remark about the government wanting to make the retirement to age 70. It doesn’t make any difference to me I just keep working. |
| Chris: | You have no plan to retire by the sounds of it Barry. |
| Barry: | I have a family business I took over a few years ago when I was about 66. I just go out and train people now. I got at least 20 years to go. I’m probably still as broke as I was at 20. |
| Adam: | If the age pension increases to 70 and if we could get to a stage when we could be having this conversation in 10 years time as the government is considering raising the age up to 75? |
| Chris: | Oh yeah where do we stop? |
| Adam: | Where do we stop? |
| Adam: | Yeah I mean things change, medical advances and how we approach employment hopefully we’ll realise the value of older employees in the workforce. It may be a possibility. |
| Paul: | I have resigned and I am on a pension. We have superannuation, but every time we put money away for superannuation they change the rules and laws that we pulled out if it completely. So they made it compulsory at the end for our employees to be covered by superannuation. We still have friends who were our employees who have no idea about their superannuation, never spoken to us about it where they superannuation went that we put into. |
| Adam: | I think the challenge of that ever changing regulations and legislations is the government finally starting to realise that you got to stop shooting the goal post and hopefully that attitude will continue into the future. We got to remember the global reason we have a superannuation and that is to force people to save for their retirement. In Paul’s employee who have no idea where their superannuation have gone to. There are way to be able to access these and the tax office has a role to play in keeping the superannuation and investment ticking over. So the safety net is there for people who lost their super. I agree with Paul that in the continual changes in regulation and legislations makes it very difficult to plan for the future. |
| Peter: | I stopped working in 1990 so I built up about $280,000 when I started at work I was 55 and wasn’t able to take a lump sum. Because the laws have always changed I can’t do that. Now I can’t access this until I’m 60 and only get a part-pension. What’s the point of putting money in when I can’t take a lump sum at the end. And I might need that lump sum to buy a house to something. They keep changing the laws and we’re back to square one. |
| Adam: | They certainly changed over the years Peter, the preservations age, the age which you can access your super on retirement. There are rules around retirement and you can in fact and continue to work in a limited way after you declare retirement. There are different ways in which you can access your super not just as a lump sum but as a pension. |
| Adam: | You mention that you can only access your pension rate at age 60, I would check that, I think you will find that you can access as a lump sum with a tax-free arrangement so you may need to get advice about that. I checked that already Adam, it can only be a part pension. I can’t take all the money. Whereas before 1968 things have changed again. |
| Adam: | Yes that’s the issue Peter, where the rules have changed over time it makes it very difficult for you to plan. If you were expecting a lump sum and now you cant get that what does that mean. You need to continue to work beyond age 60. |
| Chris: | But the day of retiring at age 55 which is what we were led to believe when we first put our money into superannuation are over. Like they are over, done and dusted. |
| Monica: | I just got a question. Our 19 year old son died in a car accident 18 months ago he’s been working full time since he was 16. He had a superannuation and a death benefit associated with this superannuation. How is that fair that it’s capped at 30% |
| Adam: | Monica, the death benefit depend who it is distributed to is generally not taxed my understanding of it. It may needs to be some consideration of that off-line but the whole idea of what a death benefit is generally speaking the insurance amount. |
| Chris: | How about we do this. How about without going into the finer details someone may not have given you the right information you may need a little bit of support. How about we get Adam to call you after the program. |
| Monica: | Yes |
| Chris: | Because 30% is ridiculous. Not with the death benefit. |
| Adam: | Generally speaking that is right Chris. |
| Barbara: | My husband is working, he is over 65, he is a truck driver. And I believe we’ve been told we’re not covered by Workers Comp at 65. |
| Darren: | Workers Compensation is a different regime. Certainly in the superannuation field TPD and disability benefit ceases at the age 60 or 65. But from a workers compensation point ofr view its a completely different arrangement. My understanding is that whilst you continue to work as a n employee there should be no restrictions on that. |
| Chris: | Because you should be covered because you’re still working. |
| Barbara: | That’s what we thought but the company only covers you for a certain amount not the full amount, not full workers compensation. |
| Adam: | Is this a self-insured? |
| Barbara: | No its a company. Big company shipping containers. I’ve just been waiting for someone to give us some answers. |
| Chris: | Barbara you wait online as well because if Adam can’t help you we can certainly pursue it as it is a legitimate story to chase I think. |
| Peter: | I had my money in super and I’ve been watching what’s going on in the past couple of years. Now I lost $2 or $3,000 out of my super. If I out my money into a bank years ago and just left in there I’d be a 100% better off than a market that fluctuates. Up and down. Someone’s making money out of our super. |
| Adam: |
That’s exactly right Peter, they are. There are obviously different investment options people with their super and depending on appetite for risk depends on the options you take. You’re going to see lots of fluctuations like that. There are cash options, property options that you can direct your super into which leave for a much more stable option. |
