Good Super managing director Andrew MacLeod said allowing the generous advantages in super taxation incentives to continue only benefits baby boomers and enables ‘intergenerational theft’ to continue.
Mr MacLeod said the issue of intergenerational theft by the baby boomers, impacting upon Generations X and Y, was a problem highlighted in the Intergenerational Report.
“While tax concessions for young and low income people make sense to encourage better retirement savings, it makes no sense to give tax concessions to the [ultra] wealthy when government tax revenues are as tight as today’s,” he said.
Tax concessions should therefore end after an objective retirement capital level is met, which should be set as a function of average yearly earnings and interest rates, Mr MacLeod said.
“Australia’s current average yearly earnings are just under $75,000 and term-deposit interest rates are around 4 per cent – to gain $75,000 at 4 per cent, a retiree would need $1.875 million in super,” he said.
“Good Super therefore proposes that a reasonable cut-off limit for tax concessions in super is the amount of capital required to achieve average yearly earnings on a fixed-term deposit.”
Mr MacLeod said the cut-off limit could be reset as part of the Budget process each year using the average yearly earnings rate ratio.
“Using an objective method would remove argument about what is a reasonable level for tax concessions,” he said.
According to Mr MacLeod, Australia needs to ensure that retirement can be funded by the majority of Australians without recourse to the pension system, which he said is a “safety net, not a comfort net”.
“Rather than fund tomorrow’s retirement for the wealthy, we should fund today’s infrastructure for the younger generations,” he said.
I think Andrew’s idea is fairly sound due to the fact that Australia’a debt needs to be reduced and the Liberal government can’t get any of the necessary legislation through the senate circus of clowns, but if he can tell me where you can get 4% for term deposit I would be interested.
What if we follow the huge wealth of the baby boomer through until after the baby boomers have passed away. I assume the next generation will inherit this huge wealth and maybe this will cut them out of the aged pension eligibility. Will that next generation spend, or save thereby cutting the next generation out of FTB and aged pension and other government subsidies. The savings of the baby boomers will have an affect on welfare costs for other generations or do I just have rose coloured glasses