Rather than fostering a fair and sustainable retirement framework, these proposed policies penalise high-income single-earner families, discourage and foster uncertainty in the area of sound long-term financial planning, and deepen the divide between taxpayer-backed unfunded retirement schemes and those available to everyday Australians.
To illustrate the punitive nature of these proposals, let’s consider a case study that should make any rational policymaker pause.
Imagine a high-income earner who makes just over $250,000 per year – a single-income household’s primary breadwinner, subject to the highest marginal tax rate. Under current superannuation rules, their employer contributions are taxed at 15 per cent, plus an additional 15 per cent surcharge, meaning they effectively pay 30 per cent tax on every dollar that enters their super fund. Over their lifetime, this individual diligently saves and invests, growing their balance to provide a self-funded retirement, which is supposedly the very goal of superannuation.
However, the government is not satisfied with this. If their balance exceeds $3 million, earnings on the portion above this threshold will be subject to an additional 15 per cent tax, including unrealised gains – a wealth tax in disguise. When combined with the existing contribution taxes and the 15 per cent death benefits tax levied on the taxable component of their superannuation, a significant portion of this person’s lifetime savings could be taxed at rates as high as 60 per cent in some cases. This isn’t progressive taxation; this is state-sanctioned confiscation.
Where is the fairness when politicians and public servants retire on lush, unfunded, taxpayer-backed pensions, while those who have worked hard, taken financial risks, and played by the rules are penalised for their success? Why should responsible savers be targeted while those benefiting from the public purse enjoy guaranteed benefits with no comparable tax burden?
The message from the government is clear: if you work hard, take personal responsibility for your financial future, and make prudent investment decisions, you will be punished. Meanwhile, those who have done nothing to secure their retirement will continue to rely on taxpayers to foot the bill for their age pensions. This is not just unfair – it is an economic disincentive that erodes the core purpose of superannuation.
Australia’s superannuation system was designed to promote self-sufficiency in retirement, yet the policies proposed in the Orange Book 2025 are steering it towards a punitive wealth redistribution scheme. If we continue down this path, high-income earners will have every incentive to explore alternative investment structures outside of super, depriving the system of capital and undermining the very foundation of retirement security.
Another contentious proposal is the recommendation that retirees allocate 80 per cent of any super balance above $250,000 to purchase a lifetime annuity. While annuities can provide a steady income stream, mandating their purchase restricts individual choice and fails to consider personal financial goals or unforeseen expenses. Critics argue that such a one-size-fits-all approach may not suit the diverse needs of retirees and could lead to reduced flexibility in managing retirement funds.
The Grattan Institute projects that these combined measures could save the federal budget over $10 billion annually. However, this focus on immediate fiscal savings may overlook the broader implications for retirement adequacy and the original intent of the superannuation system – to provide Australians with financial independence in retirement. By tightening tax concessions and imposing stricter regulations, there’s a risk of diminishing the incentives for long-term savings, potentially increasing future reliance on the age pension.
Rather than punishing those who save and invest wisely, the government should focus on ensuring all Australians have a fair and equitable retirement system – one that does not rely on constant raids of private superannuation balances to fund political agendas. If the Grattan Institute and policymakers truly care about fairness, they should start by addressing the unfunded liabilities of their own generous retirement schemes before targeting those who are already paying more than their fair share.
Naz Randeria, managing director, Reliance Auditing Services
Naz – the Grattan Institute is shambolic. They are not in the real world and expect handouts to be given at the expense of hard-working Australians to anyone, including those that simply do not want to work and are happy to live off these handouts. It is blatantly unfair, but only those stupid enough like us understand this – hard-work is in our DNA and they know it.
Unfortunately, the Grattan Institute gets air when it shouldn’t. We probably should just ignore them altogether, but it is just so unjust. It is easy to hate wealthy people. For many if not most of us, our wealth was not handed to us – it was earned, despite what was thrown at us and what is still being thrown at us along the way.
The Labor government simply DOES NOT CARE about hard-working, aspiring Australians, other than us simply being a means to their end, which is to stay in power, as we feed their insatiable appetite of falsely placed Robin Hood mentality – no matter what they throw at us. We simply pick ourselves up, dust ourselves off and keep on going. Its who we are and they know this and they love it.
They will keep on as they do and in their attempts almost kill the golden goose, but never quite. It is sociopathic actually, when you think about it, completely the opposite of what they are supposed to stand for!
The Grattan Institute and their thinking and calculators are severely flawed. We all know that. Much in the same way as the current Treasurer and Treasury -let’s hope fatally flawed as far as this current government is concerned. Its a matter of who will be left standing at the end – us or them. Unfortunately, their policies are aimed at the majority, not what is best for the country and its people generally. But I feel that the tide is turning….
Note to the government – hands off our super!
Nailed it Naz, excellent article.
Don’t know who funds Grattan, nor who these people are. Haven’t had one useful nor intelligent idea from them as long as I can remember. Why do we listen to these people, they clearly have no idea how the real works?
This last point is a really strong indication of who they are and whom they represent. This further confirms why they should not be given any air time.