Is taxing super morally wrong?

Superannuation is the pot of gold at the end of the rainbow. It’s the savings, the lifestyle, the adventure that we’ve worked so hard to one day enjoy. So many people do their best to avoid being a burden on the government by saving throughout their entire working life, those earning both a little and those earning a lot, so is it fundamentally wrong to place higher taxes on superannuation? Or is it something that retirees and those at the cusp of retirement, simply have to accept?

Yesterday, The Actuaries Institute outlined a series of changes to superannuation taxation and proposed a lifetime cap of around $2.5 million on superannuation savings. This means that concessions would be capped across a lifetime, so the wealthy aren’t getting so lucky.

Another recommendation was to increase the tax rate to 30% on super for those earning above $180,000 a year – already the highest tax bracket.

The changes are based on research suggesting that wealthy Australians are using their super as a vehicle to avoid paying tax rather than generate retirement income, but would this be punishing the majority for the wrong doings of a minority?

One of the Starts at 60 team members shared their opinion on the matter and said they believe anyone earning that much money is doing the wrong thing, that they’re all shovelling the money away doing the dirty and doing it illegally. It makes sense that people who are earning that much money pay for advice about what to do with it all, but does it necessarily mean that all of them are cheating the system? Incomes over $180,000 pa make up only 2% of the Australian labour force. In November 2015 the average annual salary was $74,724 before tax, so the average salary is quite significant on it’s own. Higher income earners also pay more tax on principal with a higher marginal tax rate that isn’t proportionate to a lower tax bracket so they are already, as an economic contributor, paying more tax than any other person. So when it comes to retirement savings, is it fair to impose higher taxes?

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If it was an average self managed super fund retiree who had a nice lump sum that still wasn’t anything special – just enough to live comfortably without government assistance – would we feel the same way about them? Would we think that they too should pay more tax despite funnelling away money into savings so they weren’t a burden on the Australian welfare system?

Does the actual problem lie in the fact that as a country, we have a problem with those who are more successful than ourselves? Do we hate the rich for no real reason other than the fact it’s them, not us? We assume that anyone on a high income has no integrity or moral conduct but is this fair?

Superannuation regardless of who owns it – no matter how much they own, is a savings account that is created so they don’t burden younger generations one day. It’s something that we as seniors have spent much of our working lives working towards only to now have it taken away.

When the pension is no longer considered a ‘right’ by the government and is instead a support service, can the government really make cuts there and cut back the only alternative option seniors have? Are they having their cake and eating too?

Tell us, do you believe changes to superannuation taxation – at any level – are morally wrong? Or is it wrong of the government to tap into superannuation while also making no changes to improve the pension circumstances? Share your thoughts in the comments below…


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