Thanks to The Australian newspaper for its clarity, no, that's not strong enough - thanks for your smack-in-the-mouth jaw-dropping knock-out description of the end of the rainbow for a union man done good.
With just $5.6m, you too can retire like Wayne Swan
- From:The Australian
- February 07, 2013 12:00AM
AN Australian worker would need a lump sum superannuation balance of up to $5.6 million to get the equivalent of Wayne Swan's lifetime pension of $166,400, which the Treasurer is guaranteed if he leaves parliament in September.
Nathan Bonarius, of Rice Warner Actuaries, said that to match Mr Swan's retirement income would require an initial investment of $5.6m in a CommInsure lifetime annuity at current rates - indexed at 3 per cent a year and payable monthly. If the potential retiree waited until they were 65 (Mr Swan is 58), such an annuity would be $1.2m cheaper at $4.4m.
But unlike many other workers, Mr Swan won't need such a balance because he is in the pre-2004 parliamentary "defined benefit" pension scheme, which does not require contributions from the beneficiary and is indexed.
Mr Swan is leading the push within government to find additional budget savings in the super system, particularly by targeting the wealthy.
Given that since 2007 superannuation drawdown by over 60s has not been taxed, even the suggestion of a tax impost greatly alarmed the industry because a $1m balance is by no means regarded as lavish.
There are believed to be more than 500,000 superannuation balances in excess of $1m if you include self-managed super funds and long-term savers in conventional super funds.
Concern about the possible tax was yesterday hosed down by Julia Gillard, who repeated a 2010 vow that Labor would "never" remove the tax-free benefits for the over 60s. But the government is looking at other measures to cut the other super tax breaks available to wealthy Australians.
Pauline Vamos, chief executive of the Association of Superannuation Funds of Australia, which represents the more conventional "defined contribution" industry, said a person on an income of $200,000 a year would need to have a balance of $2.4m to collect a pension stream of $120,000 a year.
Nicola Roxon, the exiting attorney-general, will get a pension of more than $120,000 a year after she quits on September 14, while former minister Chris Evans, who has been in parliament for longer, will get more than $140,000 a year.
Mr Swan, who is a beneficiary of the extremely generous parliamentary pension system that John Howard abolished in 2004 after pressure from then opposition leader Mark Latham, is on a significantly higher salary than those two, at about $370,000 a year.
There were reports yesterday that Mr Swan could qualify for an indexed pension of 75 per cent of his final salary, or $277,500 a year, but the pre-2004 system is sufficiently byzantine that it is hard to be certain.
If that were correct, then theoretically he would need a lump sum of more than $6m to finance that pension.
Another calculation provided by annuity specialists Challenger Group said it would require a $3.7m lump sum to provide a 58-year-old with an indexed lifetime pension of $166,400 a year, or $6.2m to provide one of $277,500 a year.