Too often I hear the line "I've paid taxes all my life, I'm...

Too often I hear the line "I've paid taxes all my life, I'm entitled to some relief in retirement".....

My response to this is always the same - BS.

Taxes are a 12 month cash-flow item, not an accumulation fund entitling you to pay less or no tax in the later years. They are used to pay this year's welfare, and State contributions for example.

Is there merit in a scaled/bracket system similar to our income taxes?

Funds with whatever the current balance cap (say $1.6M) is = 15% tax.
Funds with balances up to the next tier (say $5M) tax is 30%
Funds over that pay tax at 45%.
Could even simplify this with one rate for under the cap and another for over...

Example:
Fund income is $200k, and balance currently $3M.

First bracket - 1.6/3 x 200k = $106,666 pays tax at 15%
Second bracket - 1.4/3 x 200k = $93,334 taxed at 30%

If you can't live comfortably on $156k p.a. you're doing it wrong. And don't forget you haven't withdrawn one cent of your funds balance at this point. Planning to live another 30 years? That gives you $250k per year to live and enjoy life.

Fund pays $44k in taxes before franking credits but I need to get my head around those credits because if the entire income is from franked dividends, there's still zero additional tax to pay (in fact it's a $16k refund) and maybe that's an argument in favour of excess credits foregone... Maybe the calculations are based on not grossing up the income - and just using the cash received then tax that at 15%,, but that is double taxing and not good either.....

$200k in franked income (assume 30% tax bracket) is really $140k in cash received (or too often DRP) and the $60k in franking credits would still see the fund paying no additional tax - but the taxpayer still only receives a $140k benefit (or $156k with excess credits), not the full $200k.

Super fund balances are designed for your living and not generational wealth transfer.

TC.