‘Inequitable’ and ‘unsustainable’: Call to cap super balances at $5m Michael ReadReporter
Updated Feb 2, 2022 – 11.51am, first published at 11.35am
One of the nation’s peak superannuation lobby groups is calling on the government to cap super balances at $5 million, slamming the generous tax concessions enjoyed by the wealthiest Australians as “inequitable” and “unsustainable”.
The Australian Institute of Superannuation Trustees, which represents non-profit industry, corporate and public sector funds, wants the Morrison government to introduce a $5 million limit on total superannuation balances, arguing people with large balances are benefiting from excessively generous tax concessions.
The proposal would affect about 11,000 people, who would be required to withdraw excess funds were the policy adopted by the government.
The government’s retirement income review found a person with a superannuation balance of $5 million could achieve annual earnings tax concessions of around $70,000.
AIST said in its pre-budget submission that the balance cap would improve the equity of the super system. As it stands, the earnings on the investments in an account with more than $5 million receives the same percentage concessional tax benefit as an account with a lower balance.
“Unfortunately ... the current level of lifetime government support provided through the retirement income system is heavily weighted towards those in higher income brackets,” it said.
“Given that this cohort has a greater capacity to support themselves in retirement, it is not only an inequitable situation, but also unsustainable as the population of Australia ages.”
The group’s pre-budget submission cited analysis by Mercer that found the tax concessions enjoyed by a single $10 million self-managed super fund could fund 3.1 full age pensions.
The tax concessions offered to all SMSFs with balances of more than $10 million could fund 240,000 full age pensions each year.
