A few weeks back, Fund manager Mercer called for superannuation balances to be capped at $5 million, a stance already favoured by the likes of Super Consumers Australia and the Australian Institute of Superannuation Trustees:
Mercer senior partner David Knox said the distribution of superannuation concessions needed to change.
“We know that the biggest beneficiaries of the current super tax concessions are, in fact, those that need it the least – high-income earners,” Dr Knox told The Australian Financial Review.
This generated backlash from wealth advisers who were“increasingly concerned” that “investors with higher superannuation balances are in the firing line pre-election as a proposal to ‘cap’ how much can be kept in tax-protected superannuation gathers pace”.
Yesterday, Labor’s shadow treasurer, Jim Chalmers, calmed their nerves, stating that capping super will not be part of Labor’s policy agenda for the upcoming federal election. Chalmers also indicated that overhauling the super tax system will not be a priority for Labor if it wins the election:
Appearing at an event hosted by the Financial Services Council on Wednesday morning, Mr Chalmers was asked about Labor’s position on proposals to cap superannuation balances at $5 million and tax superannuation earnings in retirement…
“We don’t have any policies like that, that you just mentioned, and we took to the last election a bunch of savings out of superannuation, which we won’t be taking to the next election,” Mr Chalmers said.
It beggars belief that Labor supports a superannuation system that costs the federal budget some $40 billion per year:
Whose costs will overtake the cost of providing the aged pension by around 2040:
And whose concessions are so poorly targeted toward high income earners, thereby increasing inequality:
Blind Freddy can see that the superannuation system is grossly unfair and needs to change.
However, because Labor is tied so heavily to union-owned industry super funds and created the system, they vigorously defend the status quo and also lobby incessantly to lift the super guarantee.
The end result is that Australians are left with a Frankenstein’s monster system that actually worsens the sustainability of the Budget, favours the rich, and increases inequality.
