How the retirement system benefits the rich

By Leith van Onselen

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:

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…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:

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…

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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…

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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.

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  1. Good to see something from the opposition worth commenting on, hopefully starting a discussion, while getting the details right at the same time.

  2. Ah Geordie, the Discussion will be short. The answer is become rich. Its not all that difficult. Problem solved, End of discussion. WW

  3. My fellow retirees never tire of telling me how good a PM Howard was, but these charts simply add to my arguments to the contrary. Thanks UE. We used to have “Advance Australia Fair” as our anthem, but it was changed to “Advance Ore-stralia Fare” and now “Advance Astray-liar Far”. I worry for my kids and grandkids.
    “The greed is good” mantra is biting us all on the bum, regardless of where you sit in the above charts.

  4. Tassie TomMEMBER

    Once again “High Income” and “High Wealth” have been confused with each other and have been used interchangeably.

    Rich = High Wealth, not High Income. Wealth deciles should have been used for the three charts – not income deciles.

    • Totally agree that the confusion of those two is constantly irritating, but in this case it’s a “projection” so I think they’re making some inferred reference to the amount your household earned prior to retirement.

  5. And to top it off, this year, the concessional contribution amount has been increased from $25k to $30k.


      And, for those aged 49 as of 30 June 2014, the concessional cap is now $35k and ‘ Small business proceeds’ is $1,355,000 which includes a lifetime SB cap gain (retirement exemption) of $500k.


  7. Seems like a huge beat-up to me. I could just as easily use this evidence to argue that we ought to abolish progressive income tax and introduce a low flat income tax rate.
    The high income earners (people who are demonised as ‘rich’) contribute more income to super than the poor. What a surprise.!

    Income mobility is completely overlooked, as if every person will earn the same yearly income for their life.

    And the progressive income tax system we are saddled with means that these super contributions are going to save a high income earner more tax than a low income earner.

    • “Seems like a huge beat-up to me”
      Spot on Jono ! Most of the commentators here & especially The Author have a “hard on” about those who followed the rules at the time. More importantly those they are “whinging” about put AWAY more not ONLY because they could but in recognition that LATER_ON was worth SAVING for! Some like myself sacrificed for other pleasures that the brain dead were enjoying

      Jealous lot of turkeys mostly with NO F%$#@Ing idea of the circumstances of individuals concerned.

      In fact they want a “common” denominator — F%$K off to a Communist system then if you can still find one & STOP whinging about what others are getting!