Want to get more from your super?

If so, you might be wise to look at an industry superannuation fund, instead of one of the commercial funds.

A new report, admittedly funded by the industry superannuation network, raises some interesting points.

The industry funds, of course, were started by Australia’s unions.

So you would have to be eligible, to join a particular fund.

However many workers who are eligible to join one of these funds have not done so.

In fact, the report says, more than 4 million Australians workers, who would be eligible, have joined a commercial fund instead.

And, it adds, each of them is paying hundreds of dollars a year in commissions, mostly for financial advice that they do not receive.

These payments are known in the trade as trailing commissions.

Industry funds do not charge commissions of this kind.

Does this matter all that much?

Yes it does, the report says.

“Fees and commissions paid by retail fund members could cost someone on average wages more than a year’s  salary over their working life,” it concludes.

Then it adds”The more you pay for super. the less you get.

“On average, for each additional 1 per cent paid in fees, members of the largest public offer funds lost almost 1.5 per cent in net returns.

“Since 1996, more than $40 billion has been lost from Australian workers’ super accounts, due to their accounts being silently milked by commissions,” the report says.

The entire superannuation industry is being overhauled at present, with the Federal government working on a raft of new reforms.

This follows the payout shocks that many older Australians suffered after the stock market crash.

The report, though, strongly suggests that those who can shift to an industry fund would be wise to consider doing so, before the new reforms take effect.

How, though, do the industry funds perform, financially?

The report claims that they have done better than the retail funds in nine of the past 10 years.

The Federal government has announced a $41.2 million program to help workers who were    retrenched after its home insulation was cancelled, as a result of safety issues.

The industry estimates that some 6,000 workers have already been put off.

The Prime Minister, Kevin Rudd, who made the announcement blamed a small proportion of unscrupulous firms in the industry for the trouble.

Four insulation workers have been killed – and more than 100 homes have become fire traps – as a result of shoddy insulation work, performed  under the government’s home insulation scheme.

Some of the sacked workers will be offered financial assistance.

Others will be eligible for retraining.

The issue has dominated question time in Federal parliament all week, with the Opposition demanding the sacking of the Environment Minister, Peter Garrett.

However Mr Rudd struck back at opposition members, who have questioned him aggressively on the matter.

He said the jobs these workers had held would never have existed under a Coalition government.

Mr Rudd said  his government had  initiated the home insulation scheme to create jobs, after the global economic crisis struck.

“There would have been no such program under the Coalition,” the Prime Minister said.

Mr Rudd said any insulation worker, who lost his job, would also be eligible for assistance under the Federal government’s Compact for Retrenched Workers.

This would mean immediate access to high level support.

People who can’t afford private health insurance are being forced to subsidise it for “millionaires,” according to a Federal minister.

The Federal Finance Minister, Lindsay Tanner made the charge in parliament.

He did so shortly before his colleague, Health Minister Nicola Roxon announced that private health fund premiums would rise by an average of 5.78 per cent from April 1.

Mr Tanner said the “subsidy”  is the result of the opposition’s decision to block changes the government is trying to make to the private health insurance rebate in the Senate.

Mr Tanner said the Opposition is now facing a big test, on two fronts.

These were fairness and fiscal responsibility.

“Are you going to support the government or will you continue to subsidise private health insurance for millionaires?” Mr Tanner asked.

The Treasurer, Wayne Swan, announced in his budget speech last May, that the government would cut the private health insurance rebate for people on higher incomes.

Mr Swan also said that the Medicare Levy surcharge would also be increased for higher income earners.

However the Opposition, with the support of the Greens and other Senators, is blocking these moves in the Senate.

Mr Tanner said the Coalition’s obstinance would cost the government almost $10 billion over the next 10 years.

This would damage its efforts to get the Federal budget back into surplus.

He said the government had been forced to make tough decisions in its last budget.

One of these had been to apply a means test to the private health insurance rebate.

Mr Tanner said he would pay more, himself, under the government’s proposals.

“But I am afraid, Mr Speaker, that I don’t see the logic of why ordinary working people – on fifty grand – sixty grand a year – should have their taxes pay subsidies to my private health insurance, when many of those same working people can’t afford private health insurance for themselves,” he added.

“What the opposition is doing is protecting subsidies for higher income earners; doing great damage damage to the government’s budget settings; at the same time as claiming that they would be more fiscally responsible and that they would have lower deficits than the government.”

Mr Tanner said, too, that the Opposition’s Finance spokesman, Senator Barnaby Joyce, had initially supported the government’s position, but had later retreated.

“I am worried that he has been got at or something,” Mr Tanner said.

“I would like to see him step back up to the plate on this issue.”

More than 800,000 Australians have found themselves underemployed as the nation’s economic recovery gathers strength.

The Bureau of Statistics almost 900,000 Australians who want more work were not fully employed in September last year.

That included 811,600 people who were officially classed as underemployed.

The bureau’s study showed that both younger and older Australians have been hit hard by underemployment.

It said that while underemployment is more common among younger workers, older workers generally suffered longer bouts of underemployment.

The Bureau said part time workers, aged between 20 and 34, had the highest incidence of underemployment, with 29 per cent of those in this age group classed as underemployed.

The main reasons given, for this problem, were “no vacancies” in my line of work or “no vacancies at all.”

However older workers were suffering longer periods without enough work.

At the time of the survey, almost half of those aged 45-54, who wanted more work, had been underemployed for more than a year.

So had 45 per cent of those who were 55 or over.

The bureau said there were 452,100 female part time workers, among the underemployed, last September and 283,800 men.

However the incidence of underemployment among men in this group, at 30 per cent, was higher than that for women, at 20 per cent.

Australians are rapidly moving past  full reliance on the Age pension in retirement.

The compulsory superannuation regime, introduced by Paul Keating, is providing better results, on several fronts.

A senior Federal Minister, Chris Bowen, spelt that out in a speech he delivered in Melbourne.

He said the introduction of compulsory superannuation “…has meant we are all, collectively, saving more.

“The resultant national pool of wealth – which is available for investment in Australian companies, property and infrastructure – has been a crucial source of funds for our economy,” he added.

That had helped Australian industry, in the wake of the global financial crisis.

Mr Bowen, who is minister for Financial Services, Superannuation and Corporate Law, also said “The Age pension will inevitably continue to supplement retirement incomes in future.

“But a far lower proportion of retired Australians will be full pensioners,” he said .

“And a far higher proportion will be part pensioners,” Mr Bowen added.

He also quoted lines from Tony Abbott’s book, Battlelines, which Mr Bowen said  suggest that a Coalition government might slash the present tax concessions on superannuation, to fund abolition of the means test on Age pensions.

“That “would be a very retrograde step.”

“We rule it out,” Mr Bowen said.

“Mr Abbott should  as well,” he added.

So far there has been no response from the Opposition Leader.

The weekly expenses that older Australians face rose much faster than those of other people over the past year.

This is confirmed in research that the Australian Bureau of Statistics has just published.

The main reason for this is that rapidly rising food and health care bills take bigger slices of the incomes of older people than from those of the general public.

Age pensioners were  hit hardest.

The bureau reports that their costs rose by no less than 3.2 per cent, over the 12 months to the end of December.

The Consumer Price Index, which measures the costs faced by the general public, rose by just 2.1 per cent over the same time.

Self funded retirees, whose incomes are mostly higher than the age pension, did a little better than age pensioners.

The bureau reported that the cost of living, for this group as a whole, rose by 2.8 per cent over 2009.

The Bureau also reported that the living costs of both age pensioners and self funded retirees rose by 0.6 per cent in the December quarter of last year.

In this area, they did slightly better than Australia’s employees households, which saw their cost of living rise by 0.7 per cent in the final three months of last year.

The CPI rise, for the quarter, was 0.5 per cent.

Remarkably, the bureau’s “employee households” saw their living costs rise by just 0.4 per cent last year.

The bureau noted that their electricity prices, rents, insurance charges, hospital and medical fees and beer prices had all risen in this time.

However, those rises had been offset by reduced interest charges, cheaper petrol, lower audio and television prices and lower insurance costs.

The Bureau’s report strongly suggests that all Australians would be wise to review their retirement plans, to provide for the bigger health bills Australians, generally, are facing in their later years.

Thousands of Australian families struggle to meet their child care bills, with mid level fees, at government approved centres, reaching $285 a week.

That national figure, from a report by the Productivity Commission, is for full time care, of 50 hours a week.

Even the  fees, for approved family day care are not much lower, at a mid level of $267 a week.

As child care fees are commercial charges and the amount of time children spending in care, weekly expenses do vary widely.

But Canberra families, which face the nation’s highest fees, must find more than $300 a week for full time child care, either at their local centres or in appproved family care.

The report, by the Productivity Commission, also exposes significant inequities in the way government child care subsidies are spent.

It shows, for example, that many of the Australian children who most need help miss out on their fair share of subsidised child care places.

These include kids with a disability, those living in remote areas, Aboriginal children and children of migrant families, who don’t speak English well, if at all.

The report says children in all of these groups get fewer places, in subsidised child care, than those from the broader community.

But poor kids don’t.

The Commission, says children from low income families get child care places at much the same rate as the broader community.

Child care subsidies, in various forms, are a big – and rapidly rising – expense for Australian governments.

The Commission reports that Federal, State and Territory governments spent $4.5 billion on these subsidies in 2008-09.

In real terms, that was a 51 per cent rise over their spending in the previous 12 months.

The Australian notion of a fair go suggests that big ticket government spending, like this, should be spread evenly throughout the community.

However the report says only 13.2 per cent of  children from non-English speaking backgrounds benefit from subsidised child care, against 18.8 per cent of the broader community.

The participation rate for Aboriginal children was just 2.3 per cent, although they make up 4.4 per cent of the population.

The Commission also said:”Children aged 0-12 years with a disability had a lower participation in child care (3.2 per cent) compared with their representation in the community (7.7 per cent).

And only 1 per cent of Australian kids, living in remote areas, get subsidised child care, even though 3 per cent of the nation’s children live in remote areas.

The Federal Treasurer, Wayne Swan, says the Labor government’s future tax take won’t be bigger than that of its predecessor, the Howard government.

“We remain committed to keeping taxation as a share of GDP below the level the Government inherited,” Mr Swan said.

“And that’s 23.6 per cent of GDP in 2007-2008,” he told an ABC radio interviewer.

The commitment is important, because the Treasury Chief, Ken Henry, said last night that the government’s need for money would rise over the years ahead, as Australia’s population aged.

That was taken as a sign that the government might be planning to raise taxes.

Especially as Mr Henry headed a committee which has just completed a major review of Australia’s entire, ramshackle, taxation system.

The committee’s report, which runs to more than 1,000 pages, was handed to the government just before Christmas.

But it has not yet been released to the public.

Mr Swan admitted, though, that the rapid ageing of the Australian population would put pressure on the nation’s finances.

“Well, I think it’s very clear – and you’ll see this in the Inter-Generational Report which I will release in a short period of time – that the ageing of the population will put pressure on the Budget, and on the economy over the next 40 years.,” the Treasurer said.

“There are currently something like five people of working age for every person aged 65 and over,” he added.

“And in 2050 that will be 2.7.”

“That’s why the Prime Minister has been talking about increasing productivity,” Mr Swan said.

He said that’s what Australians must do to offset the ageing of the nation’s population.

” That’s the way to solve the problem of the ageing population, along with increasing participation,” Mr Swan said.

” It’s making sure that we pay attention to that critical issue of productivity, so we increase our wealth and increase our capacity to support an ageing population, and also make sure we have the right policy settings in place in health and retirement income policy which will support an ageing population,”

Mr Swan said, though, that increasing productivity meant working smarter, not harder.

Older Australians might be encouraged to work longer. But those who wanted to retire would still be able to do so.

Young mothers, wanting to set up their family benefit payments, are increasingly doing that over the internet.

Indeed,  the government says, around 80 per cent of first time mothers now lodge their claims online instead of using paper forms.

”More and more people are telling Centrelink they prefer to use the Internet to do their business,” the Federal Minister for Human Services, Chris Bowen, says.

His comments illustrate a revolution, now under way, in the methods used to pay benefits of all kinds.

Age pensions, Austudy payments, youth allowances and even disaster relief payments can all  be accessed over the internet now.

Old style visits to local social security offices are rapidly becoming a relic of  past practices.

And that’s understandable.  A brief visit, to a computer in your back room, is much more convenient.

So how do you find out just what your entitlements might be?

A visit to  www.centrelink.gov.au or www.familyassist.gov.au. will probably help.

If you still need to be certain, though, after that, a telephone call to your local Centrelink office will usually confirm your calculations.

In short,  this task has never been easier.

And Mr Bowen is proud of that.

“More families are choosing to claim family payments over the Internet, with around half of all family assistance claims now being made using convenient and improved online services.” he says.

Mr Bowen said Centrelink has worked hard  to improve these services.

The information that clients provide through an online claims is sent straight into Cenrtrelink’s records.

And that which still comes on  paper forms is also scanned into its computer system.

Mr Bowen said the service also allows busy parents to save the information they have completed and finish the claim  later.

.“The 6,000 families claiming Family Tax Benefit online and 3,400 families lodging a paper form every week are benefiting from these changes by receiving their payments more quickly, with more than 80 per cent of claims processed within 14 days,” Mr Bowen adds.

People can claim a number of family payments online including Family Tax Benefit, Baby Bonus, Child Care Benefit and Maternity Immunisation Allowance, Mr Bowen said.

And 3.9 million customers are already registered to use self-service options.

And more than 24 million online transactions were completed last  financial year.

Others wishing to register need only to go to www.centrelink.gov.au or www.familyassist.gov.au.

So you kept your job, after the crash, and Christmas, now almost upon us, is looking pretty good.

What, though, of those who didn’t.

Before y9u mutter “bah, humbug” have a look at a few figures,

They are for July, so they might be a bit old, by now.

They are so grim, though, that they would, certainly, have put big holes in the Christmas budgets of thousands of Australian families.

The Statistician reports, for example, that the average bout of unemployment for men, at that time, lasted 17 weeks.

That is, on average, they lost more than four months’ wages.

The plight of women, wbo lost their jobs, was almost as bad.

On average, they lost 14 weeks, or three months employment, and pay.

With most Australian families now, geared to a two income budget, these are very serious shortfalls.

The main response young Australians received, when they sought work, was that “there are no vacancies at all.”

That was the blunt reply that 17 per cent received, when 1`5-19 year olds applied for jobs.

But 15 per cent of those over 45, who sought employment, were told that they were “too old” to be considered.

Ill-health or disability also prevented many people, classed as long term unemployed, getting jobs.

All had been out of work for almost a year.

Unemployment or sickness benefits probably helped most of these people, a little.

But there is still no substitute for a good, full time job.

Australia’s unemployment may already have passed its  peak.

That would indeed be remarkable  as its high point so far was the 5.8 per cent level, seen in October.

The Bureau of Statistics reports now that the rate fell to 5.7 per cent in November.

The Federal government – and the Reserve Bank – were both expecting Australia’s unemployment rate to go much higher, in the wake of the global economic crisis.

Back  in May, when he delivered his annual budget, the Federal Treasurer Wayne Swan said he believed Australia could see unemployment at 8.5 per cent, before the crisis passed.

Even in his mid year review, Mr Swan predicted a 6.5 per cent peak.

The Reserve Bank Governor, Glenn Stevens, admitted earlier this week that Australia’s s recovery has been stronger than many, including the bank, had expected.

“But who’s complaining?” Mr Stevens added.

Predictably, the stronger than expected result has led to predictions that the Reserve Bank will step up its present round of rate rises.

But it cannot do so immediately, as its board does not meet until February.

Mr Swan described the latest figures as “quite encouraging.”

The Bureau reported that 31,200 Australians found jobs in November, on a seasonally adjusted basis.

And the number counted as unemployed fell by 13,300 to 653,100.

However the impact of the crisis is still clearly evident in today’s figures.

The number of Australians unemployed, in November this year, was  27.2 per cent higher than that seen in the same month last year

The Federal government says it is still “seriously” considering a national disability insurance scheme.

However the Minister for Families, Housing, Community Services and Indigenous Affairs, Jenny Macklin,  who revealed this, refused to be more specific.

“We have, of course, been interested in this idea since it was presented first at the 2020 Summit,” Macklin said.

“The government has been looking at whether we will go down this approach.

“So we’ll be giving it active consideration.”

Perhaps.  But that is still well short of a ringing endorsement for the plan.

Ms Macklin was speaking at the launch of the “Australia’s Welfare 2009″ report,  in the New South Wales country town of Queanbeyan.

The report, based on independent research, suggests that there could well be a need for such a scheme.

Australia’s population is ageing rapidly.

Its median – or mid point – age is now 36.9.  That’s up from 31.6 in 1988.

And – as Ms Macklin noted – the incidence of poor health and serious disability both rise sharply with age.

She said about 1.5 million Australians would have a high level of disability by 2010 and added that this is expected to rise to almost 2.3 million by 2030.

Chris Bowen wants you to have more than a barely adequate income in retirement.

That declaration, by the Federal Superannuation Minister, might attract more than a few hollow laughs, from ordinary Australians, in the wake of last year’s stock market crash which slashed superannuation payouts.

It is important, though, not to yield to cynicism.

So what, precisely, is Mr Bowen suggesting?

He’s not being too precise about that at present.

He’s been talking, though, of gradually raising the present 9 per cent Superannuation Guarantee levy to 15 per cent.

He says the 9 per cent levy yields just an adequate payout, for retirees.

Fifteen per cent was the original target figure, when former Labor Prime Minister Paul Keating introduced Australia’s compulsory super scheme, 20 years ago. It was never realised.

Mr Bowen is also talking of  seeking greater efficiency and lower fees, in Australia’s superannuation system.

There is  room for improvement in that area, too.

“Lower fees and commissions can significantly increase a fund member’s retirement income and a retiree’s returns,” Mr Bowen said.

He said the Federal Treasury had estimated that raising fees and charges by just 1 per cent could cut a retired person’s lump sum payment by as much as 16 per cent.

Why invest in super, at all, though when a stock market crash can ravage your eventual payout?

Mr Bowen answered that one, very persuasively,  by pointing out that Australian funds, with balanced investment options, had managed an average annual compound interest return of 5.4 per cent, over the past decade, despite the crash.

Almost three and a half million Australian pensioners are to get an immediate rise in their entitlements.

The increase will apply to age pensioners, those on disability support, carers, wife and widow pensioners and those on veterans’ income support,

They will get the extra money on their next regular pay days.

Families Minister Jenny Macklin said the increases will improve the pension’s adequacy, simplify the way it is delivered and improve adequacy.

“These are the most significant reforms since the pension was introduced 100 years ago,” Ms Macklin said.

She also described the rises as “a vital investment in preparing Australia for the future.”

The changes include both an adjustment to the base pension, which the government announced in its budget last May and regular indexation movements.

A single pensioner, on the maximum rate, will receive a total increase of $70.83 and total payments of $671.90  a fortnight.

This will be made up of:-

• an extra $60 a fortnight in the base pension
• an increase of $5 a fortnight in the new pension supplement and
• indexation rises of $5.50 a fortnight in the base pension and 33 cents a fortnight in the pension supplement.

Ms Macklin said pension rates for singles are now set at two thirds of  the rate for couple pensioners.

The total increase for couple pensioners, on the maximum rate, will be $29.93 a fortnight, bringing the total received to $1,013 a fortnight.

Their increases will be made up of:-

• an increase of $20.30 a fortnight in the new pension supplement
• indexation increases of $9.20 a fortnight in the base pension and 43 cents a fortnight in the pension supplement.

Other changes just introduced include:-

• a new work bonus, that allows pensioners to keep more of the money they might earn through part time work
• new indexation arrangements
• a new seniors’ supplement for self funded retirees who have a Commonwealth seniors’  health card
• changes to the pension income test, which include an increase in the withdrawal rate from 40 to 50 cents
• regular six monthly revaluation of all listed securities held by pensioners.

Full details are available at www.australia.gov.au/pensions.

A new report sharply criticises the protection offered to $8 billion worth of aged care accommodation bonds.

Old people, entering residential care, can be asked to pay a bond, usually costing about $190,000, to help pay for their place in the particular home.

The Auditor General’s Office, which prepared the report,  said this generally represented a significant slice of a prospective resident’s life savings.

The task of ensuring that this bond money is used appropriately has been given to the Federal Department of Health and Ageing.

The report notes several shortcomings, in the way the Department does that work.

In certain cases, of financial failure, on the part of the homes operators, the Federal government can be called upon to refund bond money, that is due to either residents, or their estates, when they leave a particular facility.

Under present law, the Federal government can levy the entire aged care industry, to recover any money it pays out, in this way.

The report notes that there have already been three “events” in which these issues arose.

In one case, the government had to pay out $19 million.

It has not yet decided whether it will levy the industry, to recover that money.

The report notes that the Department has developed a “stress test” to measure the sector’s financial well being.

But it said the “self managed” model, under which the industry operates, as well as the demand arising from Australia’s rapidly ageing population, presents the Department with many challenges.

It says these include the emergence of larger and more complex providers, the ability of providers to make “unfettered” investment decisions and “ongoing structural changes” in the aged care sector, itself.

“In the context of these challenges, the administrative framework established by the DoHA does not provide sufficient regulatory oversight,” the report says.