“The fundamental structure of the policy is not only punitive, but it also acts as a disincentive to save and be self-sufficient in retirement.”

Randeria said despite thresholds now being indexed, the value of property and assets like gold continue to rise quickly and significantly, and she expects an increasing number of people will find themselves breaching the asset thresholds in the future.

“To use a schoolyard analogy it feels as if we’re telling the younger generation not to aim for top exam marks or first place in the running race because others around them might not do as well. That’s not fairness, it’s mediocrity,” she said.

“The policy is also flawed in its efforts to increase revenue for the government. Regardless of whether you agree with a 40 per cent tax rate for balances over $10 million, it essentially creates a ‘hard cap’. We will see changes in superannuant behaviour moving forward, including withdrawals from superannuation to other structures such as companies and discretionary trusts which are not currently taxed based on asset thresholds.”

Furthermore, she said superannuants will also consider restructuring of portfolios, delaying realisations and an avoidance of high-growth strategies to avoid being penalised.

“Industry has already seen this take place over the past two years ahead of the expected implementation of the original proposal,” she said.

“Driving capital out of Australia’s superannuation system is not only bad for the industry, but it’s bad for the economy more broadly and has longer term impacts on investment, innovation and economic growth.”

She added that if people change their behaviour to avoid the higher tax rates and withdraw funds from the super environment, the government will be unable to collect the forecast revenue.

“The concern then would be how the shortfall will be met, particularly if the precedent has already been set. Will we see such asset thresholds being introduced to family trusts, companies, and other investment structures where the effective tax rate is currently 30 per cent or less?” she said.

“For those who believe such suggestions are unlikely, I remind you that it was only a few short years ago that the idea of making wholesale changes to our superannuation system were also considered unlikely.”

Randeria continued that instead of “tinkering with flawed policy” the government should instead draw on the experienced and knowledgeable minds within the superannuation and professional services associations.

“These experts have guided millions of Australians through retirement planning over decades, and have an innate understanding of the system, its complexities, flaws, and genuine opportunities for improvement,” she said.

“However, advisers have largely been left in the dark over the last two years, and instead left to make long-term financial decisions based on unreleased government modelling.”

Finally, Randeria said the backflip on the Div 296 tax has raised other questions including why Treasury refused to release the assumptions and frameworks underpinning the revised tax.

“It appears that those designing both the original and revised policies don’t have a complete understanding of the complexity or long-term nature of superannuation planning,” she said.

“The super industry has also taken note of suggestions that the government's original hardline rhetoric was strategic, and part of a broader political manoeuvre. In a corporate setting, the use of ‘strategic redirection’ would generally invite closer scrutiny, to ensure transparency and accountability. Yet, in this case it is once again the super industry that is left to make sense of a policy that has real-world implications for those planning their retirement.”