The research from the Association of Superannuation Funds of Australia found that the recent changes to superannuation tax settings have already substantially improved the equity of the system and that proposed further changes will further limit the taxation benefits for those on high incomes and with high superannuation balances.
Another key finding in the report was that the introduction of higher rates of taxation for balances over $3 million is projected to lead to a 9.5 per cent decrease in tax concessions in relation to investment earnings.
Those who will be affected are mostly aged 60 and over, with around two-thirds male. Around half are retired with those still in employment or business mostly involved in professional roles.
Additionally, the research revealed that insurance through superannuation, while not traditionally considered to be an equity measure, is a very effective redistributive mechanism that delivers substantial benefits to those most in need in Australian society.
Furthermore, as a result of increasing superannuation account balances, at Age Pension eligibility age an increasing proportion of retirees have substantial private incomes. The report stated only around 40 per cent of Australians aged 66 to 69 currently receive the Age Pension and that without super, there would be more than 500,000 extra individuals receiving the Age Pension.
ASFA Deputy CEO Glen McCrea said the upcoming federal budget provides an opportunity to further improve equity in Australia’s superannuation system.
“Introducing Superannuation Guarantee (SG) payments on paid parental leave and increasing the upper threshold for the Low Income Superannuation Tax Offset (LISTO) would substantially assist low to middle income earners, particularly women,” he said.
Some good points in this but still misses the main point in that the tax concessions for the super balances above $3,000,000 go to only a relatively small number of people. This is the cost that the government is trying to get back. A portion of the wealthy have legally exploited the various loopholes and may still spoil it for everyone. If only a thorough review of the whole system can be done to come up with a better result, then that should happen. There will be losers who will yell the loudest but there will also be the majority who will benefit.