Why Lost Super Is Government Theft of Personal Property

Right Again, and Sick of it

I’m sick of being right on this.

Just once I’d like to make a prediction about it and be wrong.

But no. Each time I explain to you what will happen, it happens.

The only thing you could accuse me of is being too conservative with the predictions.

For instance, two weeks ago I wrote:

The attack on your retirement savings is set to be a big story in 2013, especially leading up to next year’s budget.

What was I thinking? 2013? I was a fool for thinking it would take that long…because the latest attack on retirement savings happened on Monday.

For three years I’ve warned about the government’s plans to take your retirement savings. From the outset, brain-washed statists and government-lovers called me a lunatic.

But I knew (unfortunately) that I was on the right track…and that the Australian government was on the money-grabbing track.

Well, this week Treasurer Wayne Swan revealed the government’s next grab for your retirement savings.

Here are two headlines from yesterday’s Australian Financial Review (AFR):

Super levy goes up after a fall

Dormant money turned to gold

What do you make of those?

What message do they convey?

I don’t know about you, but I don’t get a sense of the government undertaking one of the biggest thefts of personal property in Australian history.

To me those headlines sound more like something out of a fairy tale or nursery rhyme…’Jack and Jill go up the hill after a fall’…‘Midas turns money to gold’…‘and everyone lived happily ever after’.

But the truth is far different.

This isn’t a fairy tale. This isn’t a stinking nursery rhyme. This is the Australian federal government stealing your money.

And aside from the tax system, it’s the biggest and most brazen transfer of wealth from individuals to the State that I’ve seen in a long time.

Under new rules, the government is set to get its hands on $675 million of private property. How? Let me explain…

 

Until now, the government only considered that super was ‘lost’ if the fund manager hadn’t been able to contact the fund member after five years of trying. Even then, it was only ‘lost’ if the balance was less than $200.

But now, in an extraordinary example of private property theft, super is ‘lost’ if the fund loses contact with the member after 12 months. On top of that, the government will swipe any ‘lost super’ if the balance is anything up to $2,000.

In isolation this doesn’t seem like a big deal, but it’s a huge deal.

As the Age reports:

With the nation’s lost super accounts holding about $17 billion, the change will deliver to the budget $675 million in savings over the next four years.

I’m sorry, perhaps I’m dumb, but how is taking private property from someone a saving for the government? It’s like saying if I steal $20 from your pocket, I’ve somehow saved $20. What about the $20 you’ve lost?

I’ll say it again: this is theft. It’s the theft of private property by the government.

Yet the press spins it as a saving for the government. It prints fairy tale and nursery rhyme headlines. And isn’t the government clever? It’s raising fees and turning someone else’s money into gold for their budget.

Isn’t Mr Swan smart?

But look at the above quote again. There’s $17 billion held in ‘lost super’ accounts. That’s accounts holding more than $2,000.

Given the slowing world economy and the government’s efforts to keep the budget in surplus, do you really believe it will be long before the government starts licking its lips over $17 billion?

Look out for the gradual ratcheting up of the definition of lost super. Until Monday morning it was $200 and no contact between fund and member in five years. By Monday afternoon it had increased to $2,000 and no contact between fund and member in one year.

So get ready for this to rise…$3,000…$4,000…$5,000.

And soon enough the government will just take all super that’s ‘lost’, whatever the amount and for however long it’s been lost. Then the government will do away with super completely, and replace it with a government pension. More on that later.

But back to the press reports…

Lost Super Fairy Tales and Nursery Rhymes

How does the mainstream press report this theft? That’s right, they give you fairy tale and nursery rhyme headlines and stories.

Take this quote in the Australian Financial Review [AFR] from Yasser El-Ansary, general manager at the Institute of Chartered Accountants Australia:

The government might have been surprised when they reached down the back of the budget couch and found a billion dollars in revenue they never thought was there.

Oh, nice one. Good joke. That’s funny.

Is he kidding? Reaching ‘down the back of the budget couch’?

The Treasurer isn’t reaching down the back of the couch to find money…the Treasurer is reaching into the pocket of private citizens and taking their money. The Treasurer is taking private property.

The Treasurer is reaching in to your pocket. And if he hasn’t yet, don’t feel too smug, because it’s only a matter of time before he does.

And the reason the government didn’t realise the revenue was there is because it wasn’t there…until the government decided to take it.

But that’s not where the government deception ends. The willing participants in the press…the reporters who are more interested in getting invites to government press briefings and luncheons than they are in telling you the truth, are happy to print the government’s spin. Take this from the Age:

The unclaimed money will be held in trust by the government, but members can reclaim their lost funds from the tax office.

Oh, that’s nice…keeping it in trust. How kind. It’ll be safe there.

If only it was true, but it isn’t.

Yet again, the mainstream press picks up a government press release and assumes the government is telling the truth.

The ‘lost super’ money won’t be ‘held in trust’ at all. The money goes to consolidated revenue. This is the government’s spending money.

Only a clown would think the government would swipe $675 million and then stick it in a bank account…or a term deposit. The government can’t buy votes if it doesn’t spend your money.

The budget is the government’s takings and outgoings. The ‘lost super’ cash is part of its takings. It will use this money to spend on its outgoings.

The government won’t hold the money. In fact, the words ‘trust’ and ‘government’ are mutually exclusive. You can’t trust the government with a cent, let alone $675 million.

You see, the government hopes that the ‘lost super’ will stay lost. It hopes that those who ‘lost’ it or forgot about it will never wish to find or remember it.

That means the government will never have to repay it.

But it gets even worse. Not only will the government take private property without the consent of the owner, but the cash will no longer be invested in potentially profitable assets (shares, bonds, property, etc)…

Investors Forced into Aussie Government’s Ponzi Scam

Instead, the government will pay a return based on the consumer price index (CPI). The current CPI? Well, officially it’s 1.2%. Although as you should know, the real inflation rate is closer to 5% than 1%.

As I say, that doesn’t matter because the government hopes no-one will ever claim their ‘lost’ super.

But here’s the problem. What the government has done is create an investment vehicle that we would never get a licence to run if you or I created it.

And if we did get a licence, it wouldn’t be long before the regulator would close us down and charge us with fraud.

The fact is the theft of private property and savings means the government has created a Ponzi scheme.

A Ponzi scheme is any financial scheme that promises a return by using other people’s money rather than by making genuine investments.

That’s the only way to describe this.

The government is promising to pay a return on an investment even though there’s no invested capital (because the government has spent it), and even though there’s no actual return (again, because the capital no longer exists for it to generate a return).

It was this kind of investment scheme (scam) that resulted in Bernie Madoff receiving a 150-year prison sentence.

It saw Allen Stanford get a 110-year prison sentence.

And closer to home, Geelong-based investment manager Graeme Hoy got a 13-years and nine months prison sentence for running a Ponzi scheme.

Yet the government runs a ‘lost super’ Ponzi scheme and what does it get? That’s right, fairy tale and nursery rhyme headlines from Australia’s timid, pathetic and dying press.

The press which is more interested in the advertising revenue it gets from the government than it is on reporting on the government’s legalised private property theft.

But if that was all the government planned to do that would be bad enough. But it’s not. There’s more…

Regulating to Submission

Not satisfied with swiping ‘lost super’, the government wants to grab the super people know about. This is the other leg of the government’s plan to return retirement savings back onto the government’s balance sheet.

As the AFR quietly reported:

The federal government said on Monday the annual levy on self-managed funds would rise to $259 from 2013–14, compared with $191 this year.

There are 478,000 self-managed super funds (SMSFs). That’s an extra $32.5 million transferred from private wealth to the government’s coffers.

And it comes just a week after the Treasury released details of new regulations on SMSFs:

The SMSF auditor registration regulations will implement the Government’s reforms relating to auditors of SMSFs as part of Stronger Super. The Regulations will specify various requirements that must be satisfied by all auditors of SMSFs as well as the transitional arrangements that will apply to existing, highly experienced and competent approved auditors.

The SMSF industry is a thorn in the side to the government, trade unions, and the funds management industry.

As I pointed out in Money Weekend on 15 September, superannuation was never about helping people save for retirement. It was a ruse to give trade unions more control over business and financial markets.

To prove it, we showed you this quote from the 28 September, 1989 edition of the Sydney Morning Herald:

The Treasurer, Mr Keating, has urged the trade union movement to use the billions of dollars generated by superannuation over the next 20 years to increase its own industrial clout.

Mr Keating told [trade union] Congress delegates that the development of union-run superannuation funds would give the union movement “institutional muscle” to supplement its already substantial industrial strength.

He suggested that the additional clout could prove a potent weapon against conservative administrations intent on eroding the power of the union movement.

In a “hostile political environment”, unions could flex their institutional muscle in the financial sector instead of simply “passing motions in the trades hall”, he said.

See, the ability for you to save for retirement was the last thing on the mind of politicians and trade unionists. It was (and still is) all about control…and using your money as the means to control you.

Well, now that SMSFs account for nearly half a trillion dollars-worth of assets, the government wants to regain control. One of its best methods (short of outright theft) is to increase costs and regulations for SMSFs.

That’s what the increase in the super levy and auditing regulation is all about.

And by my reckoning, the government is two-thirds through the process of governing superannuation. As former US president Ronald Reagan said:

If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

The next stage is to subsidize. That’s exactly what the government will do after it kills superannuation. That’s when the government will expropriate all private retirement wealth in return for people receiving an equitable government-funded super-pension.

What’s that? You scrimped and saved your whole life…tough luck, you don’t deserve any more than the person who blew every cent of their wages and never saved a penny…it’s only fair.

Saving You from the Government

As I said at the top of this letter, I’m sick of being proven right time and again on this issue. I hate it. This is the one issue where I wish I was wrong, and that the government wasn’t after your savings.

You wouldn’t believe the amount of grief, scorn and abuse I received when I first warned Australians of the government’s plans three years ago.

It would be much easier if I was like the mainstream press and just forgot about it, or played the issue down. It would be easier to give you fairy tale headlines and tell you that the government loves and cares for you.

But I can’t and won’t do that.

The government is making a gradual play for your private savings. That’s why I’m doing all I can to warn you. It’s why I started this newsletter.

It’s why I wrote to you on Monday about the ‘One Dollar’ savings plan so you can act now to grow one part of your wealth while the government is trying to take another part of your wealth from you.

Bottom line: I’m not doing this for fun. I’m doing this because I care about freedom and I care that the government is intent on violently robbing you of your wealth.

So, over the next few weeks, and for as long as I’m writing this letter, I’ll show you how to adapt the ‘One Dollar’ savings plan to suit your needs. Plus I’ll cover the other methods you can use to protect your wealth and freedom from government meddling and theft.

Cheers,
Kris

From the Port Phillip Publishing Library

Daily Reckoning:

The Australian Government is Scrounging for Every Last Cent

Money Morning: 

Profiting From Babies With a Government Budget Surplus

Pursuit of Happiness:

The State: ‘A Giant Wielded by Pygmies’

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2 Comments

  1. Kevin Huff

    Kris,

    You are spot on. But you have not followed your argument through to it’s logical conclusion, which I will get too soon enough.

    My various “financial advisers” have pushed voluntary superannuation at me for years because of it’s so-called tax effectiveness. Apart from a lapse of reason circa 1985, I have always declined, as any wealth I voluntarily dump into superannuation is in my mind lost forever.

    When I first started work there was no compulsory so-called “employer funded” superannuation. It was all voluntary, either put in by the individual or by some employers as part of a salary package. Even way back then it was meant to be this wonderful tax effective thing – an individual could claim it as a tax deduction when I was duped in 1985.

    Like all things the government puts it’s hands on, it purports lofty aims, but always ends in the gutter. Voluntary superannuation became very popular in the mid 1980′s due to the tax subsidies. Then of course the government changed the rules and removed the tax subsidies. Overnight the new investment in superannuation by individuals dried up. Lots of people (myself included) were left with a superannuation account that was no longer worth putting into, but which could not be accessed until you were retired. These accounts just sit there, attracting more fees than gains, and have done so since the late 1980′s. No doubt these very same semi-inactive accounts will attract the government’s attention at some point in time for “take over” – but I digress.

    So it was the late 1980′s and I was disillusioned about superannuation, and have been ever since. Almost every year that goes by there are more changes to superannuation. The government takes a grab at some of the golden goose, and the public backs off as much as it can. The government throws a short term tax incentive at it, and the gullible public flocks back. And so the game goes on.

    I have seen so many changes to superannuation in the last 30 years that I can’t help thinking that superannuation never has been about saving for an individual’s future, it has always been about creating a slush fund for future governments to dip into.

    Let’s face it, by the time I retire there will be no such thing as a lump sum payout (partial or otherwise) from my superannuation fund. The only thing I will be entitled to is an annuity set by some government legislated formula – drawing down the income from the funds, but precious little of the so-called nest egg. Now if I can’t access said nest egg, what chances do my kid’s have of accessing it when I am dead? I reckon none to Buckley’s. When I die the government will take the lot, and I have been telling the various “financial advisers” this since the mid 1990’s – sure they have all argued the point, and thought I was a crackpot – but the writing is on the wall and has been for almost 20 years, for those who have been willing to look.

    But what can one really expect? Basically superannuation is an industry run by insurance companies and legislated by politicians – the only thing missing is some major input from the used car industry, and you would have the unholy trinity.

    Cheers,
    Kevin

  2. Rob CA

    Most retail and industry based superannuation funds also contain death and permanent disability insurance policies which the member or their beneficiaries can claim. Premiums for this cover are paid out of the member’s fund. With the fund closed down on the transfer to the government then this cover will disappear. Try explaining this to the widow or the permanently disabled worker who thought they had this cover and didn’t bother to obtain any other insurance or cannot now obtain any insurance due to a pre-existing condition.

    The Whitlam government raided superannuation funds in the 70′s (30% in government bonds or your fund was not compliant). It was only a matter of time.

    As a Chartered Accountant in practice for some 30 years I was astounded by the Institute’s statement as quoted in your article. Theft is not revenue, as any accountant would agree. Just shows you how far removed from reality and its members the Institute has become.

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