Rice Warner has revealed that plans to either ditch the increase or make the legislated increases opt-in would increase taxes and leave taxpayers on the hook for tens of billions in extra welfare spending.
Industry Super Australia (ISA) said the modelling by Rice Warner analysed that if more people retire without the benefit of the legislated super boost, the pension costs would climb up billions each year, rising to an extra $33.3 billion (in today’s dollars) over the period to 2058.
“Dumping the legislated increase in the SG will unequivocally leave Australians with less private savings at retirement and more reliant on the publicly funded age pension,” Industry Super Australia deputy chief executive Matthew Linden said.
Rice Warner also projected the $3.4 billion added to the Age Pension bill in 2058 will continue to grow significantly beyond that.
ISA notes that Australia’s ageing population means there are fewer taxpayers for every pensioner, making it likely future governments would need to hike taxes to meet this bulging pension burden.
“Ripping away the promised super increase leaves workers worse off, despite the increased pension costs,” ISA said.
“Today’s average-earning 30-year-old couple would still lose $160,000 in retirement income, even after the taxpayer had been forced to tip in an extra $83,000 from the pension.”
ISA also pointed to the figures from the government’s own Retirement Income Review where ditching the increase would leave all income groups with lower lifetime disposable incomes.
“A plan to make the increases optional, forcing workers to pay for their own wage increase from their retirement savings, would also add $20,000 to the tax bill of an Australian couple on average earnings, because wages are taxed at a higher rate than super contributions,” ISA said.
[i]”forcing workers to pay for their own wage increase from their retirement savings”
[/i]
As opposed to the current position, which forces workers to pay for their retirement savings from their own wage increases……
would also add $20,000 to the tax bill of an Australian couple on average earnings.
Over how many years is this figure calcualted.
average earnigs of say $70,000 at the forgone 3% rise is $2,100 per annum in superannaution turned inot salary and at 32.5% tax thats an additonal tax bill for the year of $714.
So it will take 28 years to make up that $20,000 tax figure – so much for balanced no sensalionalist reporting
This article only looks at one side of the equation. Does not give the balance of how much less disposable income the workers and economy would have during their work life. Also does not consider the impact on small business.