BDO Superannuation partner Paul Rafton said that for a vast majority of people, superannuation is the longest financial commitment they will ever make.
“For people to have confidence in superannuation it is critical that there is stability and certainty around the rules that govern it,” said Mr Rafton.
“The Opposition’s proposal to tax superannuation income above $75,000 at 15 per cent has again created significant uncertainty in an area that has already had its fair share of ambiguity in recent times.”
Mr Rafton said it is not clear at what point the tax will apply under this policy or how the system will work.
“It’s time for both sides of politics to end speculation about superannuation and come together to create a genuine plan for how we, as a nation, should fund retirement,” she said.
“We need a plan that will last us for the next 50 years and beyond, and the only way that will happen is if there is a bipartisan approach.”
As the population ages, Mr Rafton said, funding retirement will be one of the most significant challenges Australia will face, and so it is far too important to be treated as a political football.
He is also concerned about the principle of introducing taxes that discourage people from contributing to super.
“The fact is that people who have made extra contributions to their super have made sacrifices earlier in life in order to do that,” Mr Rafton said.
“By doing so, they have taken responsibility for self-funding their own retirement, thus taking pressure off our already over-burdened social welfare system.”
“Proposals like this have the potential to discourage people from contributing anything beyond their compulsory contributions,” he said.
Graham I agree. It is also a problem when you try and patch the rusting hulk of the ship of state rather than embark on total tax reform. GST anyone??
The top 1% pay 17% of the income tax, the top 10% pay 49%. There are simply not enough “wealthy bludgers” to pay for the millions of middle class bludgers on welfare – many on the aged pension with up to $1.1M in super for example! There are only 1,500 funds (SMSF’s) with more than $10M. They do get a ride but are so few of them to pay for the whole of the rest of society it just doesn’t work, no matter the tax rate.
It’s simple mathematics but I am not sure if they teach that in journalism or populist political speak school.
Most people don’t really understand super or the rules. Those with SMSFs might have a slightly better idea but generally rely on advice. Notwithstanding, the general (older) public get nervous if they think they are to be disadvantaged. It is scary for retirees (with no government support) that rules are changed all to the detriment of their financial situation. I thought Mr Rafton’s comments about those many people that have made sacrifices during life to build up super balances are valid. I appreciate their are a few who have been able to maximise their super balances but in due course, under the present rules all these benefits will flow back in to the taxable system. (I would hate to do the financial modelling.)