Scott Morrison’s retirement taskforce has decided that Australians need only save for an “adequate retirement” not a comfortable one and plan to limit superannuation as a savings vehicle for the wealthy to accumulate large balances underpinned by tax breaks. But it is what they are calling wealthy that has me wondering.
The government is said to be planning a change to the superannuation tax laws either in the next budget in May or in the upcoming tax package that will likely include issues like the GST.
Word on the street is that they could be planning to tighten tax breaks on any household with an income over $100,000, the level the government is calling a “high income earner”. Given the median individual wage in Australia is now at $74,724, this will affect a lot of people.
The Australian is suggesting that the tax break currently enjoyed by people contributing to their super could be cut by 15-20 per cent in the higher tax brackets, dis-incentivising people from saving for retirement but also limiting the tax free environment’s use for the wealthy once in retirement.
The one thing the government has in its favour is the fact that many under 50s in Australia simply don’t understand the superannuation system so it is something many don’t feel an empathy or interest in. In addition to this, few think about retirement savings consciously understanding what affects it before this age also. So it seems the government has a “get out of pain free” card in its pocket.
A newspoll released overnight by The Australian shows that 62% of voters were in favour of the government raising tax rates on superannuation contributions by these purported high income earners while 27 percent were opposed and 11 percent were undecided.
It strikes me that the 1800+ people surveyed for this were from “middle Australia” as most newspolls exclude the opinions of over 54s, therefore it would not have heard from those battling in retirement with a mere “adequate”: income who want to shake their kids early in life and encourage them to save so their children’s retirement is more exciting and less stressful than their own.
By reducing the scope of the tax breaks available on super today, the government will be able to scrape back 6 billion dollars per year, The Australian reports today. But is this the best outcome for future retirees?
Are we risking perpetuating the pension crisis we live in today with the older generations battling to make ends meet through poor savings over previous decades. Is that what we want for our children?
So today we ask you to share the true perspective of being retired with an “adequate” income and whether you think the policy should be adapted to reduce super tax breaks even if it sacrifices the future retirement quality of some.
Have your say on whether the government should cut people’s ability to put money into their super earlier in life and save for a comfortable retirement?