Retirement
How much are superannuation taxes costing you in retirement?
Unnecessary superannuation taxes are leading to Australians retiring with less, costing the government more in the long run, new research has found.
How much are superannuation taxes costing you in retirement?
Unnecessary superannuation taxes are leading to Australians retiring with less, costing the government more in the long run, new research has found.
Findings released by the Australian Taxation Alliance showed that the 15 per cent tax rate on interest along with high returning superfunds and compound interest over a lifetime add up, with the average worker retiring with 25 per cent less money in their super.
Based on the current superannuation rate that is legislated to go through starting 1 July 2021, the research found that a typical worker who starts work at 25 with an income of $65,000 will retire with $28,300 instead of $37,800 per year.
According to the Association of Superannuation Funds of Australia’s Retirement Standards, a modest retirement requires $40,829 on the assumption the retiree owns their own home.
The grassroots tax advocacy group pointed out that this ‘unnecessary’ tax is costing Australians and seeing many retire with just 54 per cent of their working income.
The group also argued that the tax on contributions greatly impacts a person’s ability to retire comfortably, noting that if the tax on contributions were to be scrapped, a worker would be able to retire on 63 per cent of their working income as opposed to 54 per cent.
“Superannuation is just another tax that buys the trust of Australian taxpayers with false promises of social security and other benefits,” said ATA policy researcher Xin Yuan Quek.
The truth, Mr Quek said, is "these taxes are hurting us more than protecting us".
“The triple taxation of superannuation doesn’t serve anyone well. The federal government only collects $12.9 billion per year in super taxes and yet they have to pay out over $50 billion in the means-test age pension,” Ms Quek said.
Ms Quek noted that many Australians depend on superannuation to preserve their savings, but they are taxed on contributions, investment earnings and withdrawals. These taxes accumulate and rob Australians of a comfortable retirement.
“The superannuation scheme is merely a wolf in sheep’s clothing, robbing taxpayers of financial independence on the pretence of caring for retirees,” she concluded.
RELATED ARTICLES
About the author
About the author
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
