Changes to the superannuation system announced today by the Federal Government are a long-overdue step which will make superannuation fairer and more sustainable, the ACTU said today.
ACTU President Ged Kearney said that the Keating Government and the union movement introduced superannuation to provide low-to-middle income workers with a comfortable retirement – not as a system of tax planning for the wealthy.
“These are changes which reflect the true spirit of the superannuation system that was introduced in 1992 – a system designed to allow hard-working Australians to enjoy a secure and comfortable retirement,” Ms Kearney said.
The changes will see a 15 per cent tax on earnings over $100,000 from assets supporting income streams, a move that will affect just 0.4 per cent of retirees.
“Superannuation is a world-leading system for ensuring that low-to-middle-income workers have enough for a comfortable retirement. It also ensures that the Aged Pension remains sustainable even though Australia has an ageing population,” Ms Kearney said.
“This Government has moved to make superannuation stronger by lifting the compulsory superannuation guarantee from 9 per cent to 12 per cent. It has also moved to reduce taxes on superannuation for low income earners, a change that Tony Abbott has vowed to oppose.”
“These are changes which will give more workers a decent income in retirement.
“There must be tax incentives to encourage people to make contributions to superannuation, but the purpose of superannuation was not to provide unlimited tax breaks for high-earners.
“In 2006 Liberal Treasurer Peter Costello decided to give very high-income earners a tax holiday by abolishing Reasonable Benefit Limits. Amending these changes recognises superannuation’s primary purpose.
“The system is still very generous to the well-off. Under the new arrangements, a retiree will be able to earn $200 000 in a year and pay the same tax as a worker on less than $70 000 a year.
“People on high incomes will be able to provide for themselves in retirement without relying on tax concessions, and we need to look at how sustainable these concessions are in the long-term.”
The chart below shows three examples of a taxpayer under the changes announced today:
(Note: Average weekly earnings is $72,436 pa)