Modelling by actuaries Rice Warner for Industry Super Australia’s submission to the federal government’s tax review found almost half the population that retires in the years through to 2055 will not have enough income to achieve a comfortable retirement under current policy settings.
On average, 63 per cent of single women will fall below the comfortable retirement standard, as will 50 per cent of single men and 45 per cent of couples, Industry Super Australia stated, taking into account their super, the pension and other savings combined, in a fully mature super system.
“One of the main causes is poorly targeted tax breaks on superannuation, which are now wildly out of balance between high income earners and those on medium to lower wages,” said David Whiteley, chief executive of Industry Super Australia.
“Our analysis of retirement incomes shows current tax breaks flowing to the top 1 per cent of Australian income earners will more than double their retirement income. Perversely, the lowest paid Australians, who receive no tax break, suffer a 14 per cent reduction in their superannuation income,” he said.
“As a result, the income of the top 1 per cent of couples retiring in 2055 will be almost 10 times higher than couples at the lowest end of the income scale. This gap is clearly inequitable and unsustainable.”
Industry Super Australia is calling for the re-calibration of super tax breaks and wants to see the low income superannuation contribution re-introduced.
Good commentary on a “bottom up” comment from a lobbying organisation that ignores the big picture.
The apparent wildly out of balance super tax breaks for high-income earners is entirely a consequence of a marginal tax system with stepped personal tax rates. A mathematical consequence of any tax break is a big benefit for the higher taxed (who happen t be the higher payed).
Thought experiment: Adjust the personal taxation system to flat-rate or user-pays. The higher earners will pay less tax but it will arguably pass the “fairness” test.
The continual stream of dribble coming from the industry super sector is wearing thin.
The same tax breaks are available to all tax payers, regardless of income level. The high earners can obviously contribute much more after tax (non-concessional) contributions than lower income earners. We all have choice in our lives – some want to spend any excess on consumables, some will invest in shares, property & super for the future. To then penalise this latter group is unwarranted and unfair.
The really high value super fund balances will have no impact on anyone else – leave them alone!
As with most people who have already commented – this article is a piece of crap. What they do not state is the level of benefits the rich used to get when they could put hundreds of thousands of dollars into super before the reforms of Howard/Costello – this created large balances which can not be replicated since. What it also does not state is that the rich will have significant other income outside superannuation so that their incomes will always be above whatever arbitrary cut offs that make a comfortable retirement!! The research does not appear to look at only income from superannuation, but what makes a “comfortable retirement”.
In conclusion, most of the rich that have super, built it up when limits were far more relaxed than they are now, that they will also have comfortable life style. Why – BECAUSE THEY ARE WEALTHY PEOPLE with income from many sources and have paid significant tax on non super income.
Super tax breaks might be unfair/unsustainable in certain cases but it’s a huge leap of ‘logic’ to say they will cause those on lower to medium wages to fall below the comfortable retirement standard.
The failure of many to achieve a comfortable retirement standard is about much more than just the tax breaks on large super accounts. Not saving enough, investing in high cost/poorly performing funds, being overly optimistic about future returns/risk etc all come to mind as being more of an issue.
This is just absolute rubbish from a lobby group. The same tax benefits are available to high and low income earners. High income earners however utilise the tax benefits better.
Word is advise industry super Australia start to advise and educate you take the laed and responsibility
Unbeleivable – what stupidity – it was 10 years ago there was a avalanche of support to put more money into super and arguing that super was taxed at 45% – 15% going in, 15% in the fund and 15% when taken out.
This argument that is benefits high income earners is garbage – the deduction is limited to $35k other wise there will be no incentive. Dont be gutless the biggest inequities as in state based consitutionally protected funds and the federal publiic service.
The reintroduction of the low income super contribution would be a good thing and about the only sensible words to come out of Whiteley’s mouth. It doesn’t make sense to have low income people paying little or no tax on their personal incomes but then hit them with a flat 15% tax on their super contributions.
Apart from that, the rest of his submission/statement is rubbish. The Top 1% of income earners will always have significantly more as a retirement income than the lowest end. This has always been the case and will always be the case. Apart from a massive nationalisation of independent wealth, there is little that can be done to lift people with poor education and skills out of poverty. The facilities are there for people who want to study, learn, educate and improve themselves but they have the attitude that school is for losers.
SGL will never provide sufficient super. I am not a high income earner but have contributed 5% of my income to super for my whole career and have sound level of super which will provide comfortable retirement.
Does this modeling take into acccount if the middle to lower end make additional contributions those are matched by the Government? I would expect that those that earn more, and are PAYG, actually have more going into super through basic contribution obiligations?