Retirement
‘Perverse pension tax' unfairly impacts middle Australia
A couple that retires with a $1 million super balance will have less annual retirement income than a couple that retires with $400,000, according to new analysis.
‘Perverse pension tax' unfairly impacts middle Australia
A couple that retires with a $1 million super balance will have less annual retirement income than a couple that retires with $400,000, according to new analysis.
Industry Super Australia (ISA) said it had considered the Age Pension means test and found that in the next decade, more than 1 million Australians will be caught in an “unfair retiree tax that will mean they will end up with less spending money after saving more”.
ISA outlined that the means test curbs the government pension by $3 a fortnight for every extra $1,000 in savings that retirees have over the asset threshold – known as the asset taper rate.
“This harsh rate drastically wipes income from those who saved more,” it said.
According to the association, “The trick tax arithmetic creates a disincentive to save and punishes those who have taken responsibility for their retirement during their working life and built a modest nest egg.”
The taper rate doubled from $1.50 to $3 back in 2017.
ISA reported that for hardworking Australians who are retiring with $400,000 to $875,000 in super, “This perverse pension test means their retirement income actually goes backwards with the more they save.”
It gave the example of a couple who had saved more than $875,000 having $12,000 less per year to spend than if they had retired with $400,000.
Weighing in on the issue, ISA chief executive Bernie Dean said, “These workers have saved hard their whole life only to reach retirement and find out they are being penalized for their financial responsibility.”
“It provides a disincentive to save, it flies in the face of reason and is just plain unfair,” he continued.
Mr Dean said responsible retirees “deserve to be given a leg-up by the government – not dragged down by an unfair retiree tax”.
ISA outlined that the taper rate would be better positioned at $2 – better enabling the rewarding of retirees that save.
About the author
About the author
Superannuation
Top 5 members satisfaction super funds revealed
The COVID-19 pandemic has seen superannuation satisfaction reach record highs, new research has revealed. ...Read more
Superannuation
New super laws divide industry groups
Your Future, Your Super legislations have reached Parliament, dividing opinions among key stakeholders. ...Read more
Superannuation
ISA applauds Minister Hume for opposing super for a home plan
The government has no immediate plans to allow Australians to access their superannuation to buy a home, Jane Hume has confirmed, despite ongoing calls from backbenchers. ...Read more
Superannuation
Your Future, Your Super hits Parliament
The controversial Your Future, Your Super reform package has been introduced to Parliament, paving the way for the continuation of the government’s fierce debate with the super sector. ...Read more
Superannuation
Super funds deliver slim January gains
Superannuation funds have made ‘a small but positive result’ at the start of 2021, although the pandemic still poses a significant risk to future returns, new research has revealed. ...Read more
Superannuation
Age pension to explode if super guarantee is ditched: ISA
Failing to lift the superannuation guarantee to 12 per cent will inflate Australia’s aged pension bill to $33 billion by 2058, and may lead to tax hikes to meet the bulging burden, new research has ...Read more
Superannuation
Why it’s the right idea but wrong time to lift the SG
As Australia surfaces from its first economic recession in almost three decades, the focus should be on creating new jobs instead of lifting the superannuation guarantee, an accounting body has said....Read more
Superannuation
‘RBA helping the government knock off’ super increase: Keating
Former Prime Minister Paul Keating has accused the Reserve Bank of Australia of laziness, opining that the bank is aiding the government in knocking off the legislated superannuation increase at the...Read more
Superannuation
Top 5 members satisfaction super funds revealed
The COVID-19 pandemic has seen superannuation satisfaction reach record highs, new research has revealed. ...Read more
Superannuation
New super laws divide industry groups
Your Future, Your Super legislations have reached Parliament, dividing opinions among key stakeholders. ...Read more
Superannuation
ISA applauds Minister Hume for opposing super for a home plan
The government has no immediate plans to allow Australians to access their superannuation to buy a home, Jane Hume has confirmed, despite ongoing calls from backbenchers. ...Read more
Superannuation
Your Future, Your Super hits Parliament
The controversial Your Future, Your Super reform package has been introduced to Parliament, paving the way for the continuation of the government’s fierce debate with the super sector. ...Read more
Superannuation
Super funds deliver slim January gains
Superannuation funds have made ‘a small but positive result’ at the start of 2021, although the pandemic still poses a significant risk to future returns, new research has revealed. ...Read more
Superannuation
Age pension to explode if super guarantee is ditched: ISA
Failing to lift the superannuation guarantee to 12 per cent will inflate Australia’s aged pension bill to $33 billion by 2058, and may lead to tax hikes to meet the bulging burden, new research has ...Read more
Superannuation
Why it’s the right idea but wrong time to lift the SG
As Australia surfaces from its first economic recession in almost three decades, the focus should be on creating new jobs instead of lifting the superannuation guarantee, an accounting body has said....Read more
Superannuation
‘RBA helping the government knock off’ super increase: Keating
Former Prime Minister Paul Keating has accused the Reserve Bank of Australia of laziness, opining that the bank is aiding the government in knocking off the legislated superannuation increase at the...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
