Ben Styles, co-founder and chief commercial officer at SuperAPI, said the current superannuation policies are leaving young Australians facing the prospect of being penalised for “working hard and achieving”.
“This is un-Australian and disincentivises ambition and financial responsibility,” Styles said. “Instead of punishing people for being successful, we should be focusing on lifting those at the lower end, creating incentives for young and low-income workers to save and invest in their future and removing penalties like taxes, that might stand in the way of them achieving the same wealth that boomers have enjoyed for decades,” Styles said.
Styles said that owning a home feels increasingly out of reach for many young people today and, for some, will be unattainable.
“That means superannuation is likely to be the most valuable long-term asset many Aussies will ever have. If you look at how retirement calculators are still being designed, though, they largely assume home ownership is a given,” he said.
“Superfunds are modelling retirement outcomes based on the past experience of boomers, not for generations that are presently struggling to break into the housing market in the first place.”
He added that superannuation doesn’t just assume home ownership; it assumes young people can afford to play it safe with their investments.
“Too many default super options funnel them into low-growth ‘Boomer Funds’ that prioritise stability over returns. But for a generation locked out of the housing market, super is their best chance to build long-term wealth,” he said.
“If the assumption is that everyone owns a home, yet young people and low-income earners aren’t being given meaningful support – such as tax offsets to help them get ahead – then we’re only widening the wealth gap between generations and income brackets.”
Furthermore, Styles said the proposed $3 million super tax, unindexed, is “a sneaky tax on young people, tomorrow” dressed up as a “tax on rich people, today”.
“The deceptive tax grab that borrows from young people’s future relies on the fact that in 40 years when today’s 25-year-olds are retiring, $3 million will not be considered a very high balance,” he said.
He added that the facts of today’s wealth divide cannot be dismissed where one in five working Australians already pays 80 per cent of the country’s total income tax.
“If we make it less attractive to work hard and move up into higher income brackets, we risk discouraging aspiration and undermining the very system that funds our schools, hospitals, and infrastructure,” he said.
“Our focus should be on enabling upward mobility, not on policies that stifle growth and divide generations further. Taxing high super balances isn’t the solution.”
Yes and no Ben.
Taxing $3m+ extra is fine, I’d be happy if the TBC was the limit (i.e. $2m going fwd) but….it should remain indexed to the TBC for the reasons you espouse and of course we should stop pandering to industry funds and tax fund income only, not unrealised capital gains.
Totally on board though with making it easier for the young (incl removing refundable franking credits). This would mean extending the limits for div293, not bringing them in. Also allowing greater CC’s maybe up to the TBC or some % of it. Most young people when very young can’t afford extra contributions. Later when they can but will retire soon they are limited to the CC limit, carry fwd notwithstanding. Let’s face it I’d want to retire with more than $500k in super, you should have double the CC limit up to say 50% of the TBC in TSB.