Former Assistant Treasurer Nick Sherry has given his predictions for the future of superannuation and the retirement income system and urged Australians not to believe “any politician in government” who promises a moratorium on super changes.
Recently, Prime Minister Tony Abbott said the government has made “a very clear decision” that it will not ever increase taxes on superannuation.
However, at a Tax Institute conference in Sydney yesterday, Mr Sherry warned delegates against believing politicians who promise superannuation and the retirement income system will remain untouched.
“As a former politician all I can say is don’t believe any politician who says they’ll give you certainty. They can’t give you certainty,” Mr Sherry said.
“Governments come and go, policy comes and goes, and given the fiscal pressures on government… no politician can give any sort of long-term certainty on any policy area, including retirement incomes."
He also suggested that any politician who is seeking consensus before carrying out retirement income reform will not be successful.
“You are not going to get consensus," he said. "The competing interests are very divergent, ranging from those who want no change to those who want extremely radical change."
Despite the Liberal party’s current stated commitment to no superannuation tax changes, Mr Sherry believes there are policy options that both sides of politics would likely consider implementing.
The introduction of a total lifetime cap on superannuation contributions, in addition to an annual cap, is a distinct possibility, Mr Sherry suggested.
He also said that increasing the access age for superannuation could be considered.
“I am sure the current Liberal government, who said no changes to super taxes, would be looking at this one. If you increase the super access age, and place it towards or the same as the pension age, you do save on your tax treatment,” he said.
Mr Sherry also believes that tax-free super at age 60 will eventually be ruled out.
“I just do not see how, long term, it’s going to survive,” he said.
“We have budget deficits that are significant, the remorseless pressure of ageing and longevity, which has been well known by both sides of politics for a long time, and all the other competing budget pressures."
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