Modelling by actuaries Rice Warner for Industry Super Australia’s submission to the federal government’s tax review found almost half the population that retires in the years through to 2055 will not have enough income to achieve a comfortable retirement under current policy settings.
On average, 63 per cent of single women will fall below the comfortable retirement standard, as will 50 per cent of single men and 45 per cent of couples, Industry Super Australia stated, taking into account their super, the pension and other savings combined, in a fully mature super system.
“One of the main causes is poorly targeted tax breaks on superannuation, which are now wildly out of balance between high income earners and those on medium to lower wages,” said David Whiteley, chief executive of Industry Super Australia.
“Our analysis of retirement incomes shows current tax breaks flowing to the top 1 per cent of Australian income earners will more than double their retirement income. Perversely, the lowest paid Australians, who receive no tax break, suffer a 14 per cent reduction in their superannuation income,” he said.
“As a result, the income of the top 1 per cent of couples retiring in 2055 will be almost 10 times higher than couples at the lowest end of the income scale. This gap is clearly inequitable and unsustainable.”
Industry Super Australia is calling for the re-calibration of super tax breaks and wants to see the low income superannuation contribution re-introduced.