ABC’s Fact Check has conducted an interesting examination of the extent to which Australia’s retirement system benefits different income earners and has found that wealthy Australians receive the lion’s share of taxpayer benefits.
First, superannuation:
…the top 10 per cent of income earners reap about 38 per cent of the government support provided via superannuation tax concessions.
This money would otherwise be paid in tax if the superannuation concessions weren’t available.
The chart shows that the bottom 10 per cent of income earners are actually disadvantaged by paying 15 per cent tax on their superannuation, because their overall tax rate is below 15 per cent…
Next, overall government support taking into account both superannuation and the Aged Pension:
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Treasury data produced in April 2012 that combines age pension and superannuation tax concessions across 10 categories of income earners…[shows]… the top 10 per cent of income earners still receive more government retirement support than the other 90 per cent, and support for the top five, and top one, per cent is even higher.
The top five per cent of income earners are getting around $430,000 in government support, compared to around $250,000 for the bottom 10 per cent of income earners…
Mercer and the Australian Institute of Superannuation Trustees have also published research projecting the total government support from combined age pension and superannuation tax concessions…
Low income earners benefit most from the age pension, whereas high income earners get the most benefit from tax concessions on their superannuation investments…
Additionally, only the 9.5 per cent employer superannuation guarantee is included and Dr Knox acknowledged people on high incomes will add more money by salary sacrifice…
Even when the age pension is included, the top 10 per cent of income earners still benefit more than the other 90 per cent from government support.
Nothing we don’t already know: the Australian retirement system is skewed heavily in favour of the rich, undermining the progressiveness of the tax and welfare systems.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
