The Australia Institute said superannuation tax concessions benefit only the top 10 per cent of earners and those whose super balances do not meet the asset criteria for the part pension.
It found that women and low-income earners are being left behind by a superannuation tax concession system that disproportionately benefits high-income earners and men and exacerbates income and gender inequality which comes at a cost in foregone revenue.
The research revealed that super tax concessions cost $54.56 billion in foregone revenue during 2022–23, and disproportionately benefit the wealthy. It also found that the top 20 per cent of income earners receive more than 50 per cent of superannuation tax concessions.
It continued that the share of Australian workers with a super fund above $1 million is just 2.5 per cent, but those people made 20.1 per cent of all personal super contributions in 2020–21.
Furthermore, it stated that removing the tax concession for both super contributions and earnings from the top 10 per cent of earners would save more than $12 billion every year.
Statistics show that women retire with a super savings gap of nearly 25 per cent compared with their male counterparts and according to this latest research Australia still experiences above-average rates of poverty in retirement (6th highest rate of retiree poverty in the OECD).
Finally, the report stated that superannuation tax concessions are forecast to overtake the cost of the age pension in 2045–46.
Dr Minh Ngoc Le, a postdoctoral research fellow at the Australia Institute, said while super tax concessions are designed to help all Australian workers save for retirement, the distribution of these benefits is incredibly unequal.
“Treasury estimates show that, dollar for dollar, high income earners actually receive more government support than those on middle and low incomes because of our current superannuation system,” he said.
“Continuing to provide tax concessions for the wealthiest Australians will soon cost the taxpayer more than the age pension, a complete reversal of what superannuation is designed to do.
“It’s clear superannuation tax concessions are no longer fit for purpose, and forgone revenue from super concessions for Australia’s wealthiest individuals could instead be used to support retired Australians living in poverty.”
“At the end of the day, most people pay no net tax. Yet this is rarely touched on.”
This is correct. I haven’t seen stats on this for a while but INCLUDING GST 55% pay no net tax (tax paid minus government transfers). You don’t need to be a wiz at numbers to calculate who is funding the entire country. ESP as the next 10-15% of the 45% that do pay net tax barely pay any at all.
Thank you David
I am sick and tired of being treated as though I have done something wrong to be in this position where I am in the top 10% of earners but somehow must have rorted the system or don’t deserve to enjoy what’s left of my after tax dollars or my savings in peace.
Being in the top 10% also means that I have paid far more tax than most. That is absolutely without question.
At the end of the day, we should be congratulated for doing the best that we can to give to this country and to keep the social welfare system afloat, and congratulated also that we are not a burden on the government as we can largely look after ourselves.
It is scandalous that the government consistently wastes our money and consistently allows profligate waste and rorting of these monies on badly run schemes such as the NDIS as an horrendous example of an atrocious waste of tax payer dollars, which is getting far worse each year. It worries me that the government, instead of fixing a broken system, seems to be hell bent on funding further rorts of systems such as these. And of course they come after the same 10-20% for yet more.
At the end of the day, most people pay no net tax. Yet this is rarely touched on.
Aged pension (aph.gov.au) is forecast to be $72b in 25/26.
Also “20 per cent of income earners receive more than 50 per cent of superannuation tax concessions.” This is ENTIRELY fair. Roughly 60% (afr.com.au) of all tax revenue is paid by this same 20%.
“Women have 25% less super”. Well until men can have babies it will always be hard to have the same numbers no matter how the pay disparity is reduced due to time off work and compounding.
The people who make these pronouncements are morons. It’s selective data collection to create a headline or push a narrative without any cross sectional analysis or true independence.
What they really should look at is making pensions taxable. Tax on the taxable component with a 15% rebate. Anyone heard of this before? Fr credits should not be refundable over tax payable.
Research like this is so scewd. I would like to know please how much of government expenditure is spent on the bottom 20% of earners. Is it anything like the $54billion in “forgone” revenue discussed above? I suspect that it is very significantly more and that self-funded retirees actually save the government many more billions of dollars as they are able to support themselves throughout retirement.
The intentions of the government are now abundantly clear anyhow with Div 294. With the super guarantee at 11.5% very soon and then 12% it may not be necessary to place more money into super. (I am assuming that the research has been done to calculate the 12% of earnings over a lifetime is equivalent to support retirement WITHOUT government support.)
I used super to get enough money into super to last me through my entire retirement for more than a “comfortable” retirement. The current definition of “comfortable” retirement is farcical, relies on a government pension and seems to rely also on home ownership. The people that do these statistics do not seem to live in the real world whatsoever.
With rapid equity growth over just the last 6 years, I have gone well over the $3m mark which I breached back then. Now, in order to get to those funds, I need to retire which means selling my business. Unfortunately, the funds are locked away and only because I was enjoying working that I stayed in the business 6 years longer than I had originally planned 35 years ago.
I would recommend to everyone, save only what you need for your own comfortable retirement within super and have the rest of your savings outside of super where the assets can still be protected, and in a vehicle with tax benefits. You may do better financially outside of super than by having funds locked up within a very (understandably) restrictive superannuation system. You will also have far less red tape to contend with and immediate access in times of difficulty (my present situation – I need the funds for urgent repairs but can’t access the funds). Catch 22 until my business is sold, then happy days!
I behooves the government to keep people in poverty – that is the real issue here.
I would also like for someone who has access to research to please advise what the magic number is to stay on a certain income before most government rebates/incentives start to cut out and when do they cut out completely? Many people will only work up to a threshold so as to maintain these hand-outs. Work outside of these thresholds and you are punished severely, financially.
Many others I know will not work overtime as they refuse to work an extra 8 hour shift and only get paid for 4 of those whilst the government takes the other half of the pay (almost – 47% incl Medicare), and even more once GST is factored in.
The government relies on people like me because they know that we are wired to just keep on keeping on despite what they throw at us. Do I feel stupid? You bet!