The firm said that individuals with a super balance above $5 million, of which there are more than 11,000, according to the Retirement Income Review, should be required to reduce their balance below the proposed $5 million cap by the age of 70 or 75.

A three-year transition period was suggested by Mercer to allow for the sale of assets that are not able to be sold quickly.

“We know that the biggest beneficiaries of the current super tax concessions are in fact those that need it the least – high-income earners,” said Mercer senior partner Dr David Knox.

“While there has been no shortage of commentary that lower-income earners need greater concessions, we must find a way for reforms to be financially sustainable and place no added financial strain on the federal budget.”

“Currently, there is no requirement for individuals to draw down their super assets during retirement, outside of what’s placed in a tax-exempt pension product, capped at $1.7 million,” Dr Knox explained.

“This means that most of the investment income from these assets is subject to just 15 per cent tax. That’s less than the lowest personal income tax rate.”

The Australian Institute of Superannuation Trustees (AIST) similarly called for a $5 million limit on total super balances in its pre-budget submission last month.

“The current level of lifetime government support provided through the retirement income system is heavily weighted towards those in higher income brackets,” it said.

“Given that this cohort has a greater capacity to support themselves in retirement, it is not only an inequitable situation but also unsustainable as the population of Australia ages.”

In addition, Mercer has also proposed that a 15 per cent tax rate be applied to all investment income received by super funds and that a concession of 15 to 20 per cent be provided for all concessional contributions below existing annual limits.

“Almost every year, the super tax system is tinkered with, and still, issues of inequity persist,” said Dr Knox.

“It’s time to fix the problems for a fairer and simpler system, once and for all, and strengthen community confidence in superannuation for the long term.”