New modelling released by the Financial Services Council suggests that Prime Minister Anthony Albanese’s plan to double the tax rate for Australia’s richest super savers will affect 500,000 people, rather than the 80,000 individuals the government has claimed.
The $3 million retirement savings cap would catch out six times more people than Labor says, including young workers set to be included in the coming decades.
Of the 500,000 set to be affected by Labor’s policy, 204,000 are workers under 30. The changes were announced after official banking regulator data showed Australia’s superannuation savings pool shrank by 3% in 2022 as interest rates rose.
Albanese and his Treasurer Jim Chalmers have argued that their plan to double the concessional tax rate on super concessions, from 15% to 30% starting July 1, 2025, would only affect 0.5% of the population.
This is part of a plan to save the Budget $2 billion a year in forgone revenue. However, the chief executive of the Financial Services Council, Blake Briggs, said Labor’s refusal to index the $3 million cap for inflation would mean that 500,000 Australians in the workforce would be affected in the coming decades.
The Financial Services Council, which represents retail superannuation funds run by big corporations, said workers now in their 20s were likely to have $3 million in super in four decades’ time as inflation and wages growth compounded retirement savings levels.
That means a 25-year-old IT technician earning $100,000 a year with just $35,000 in super now would reach the $3 million threshold by age 65, two years before this individual could qualify for the aged pension.
A 45-year-old school principal earning $150,000 who now has $650,000 in super or a 55-year-old dentist earning $220,000 who now has $1.4 million in super would also be affected.
Dr. Chalmers has explicitly ruled out adjusting the $3 million cap for inflation, a process known as indexation. Australia’s superannuation pool shrank last year as the Reserve Bank raised interest rates eight times to deal with inflation surging to a 32-year high of 7.8%.
The Australian Prudential Regulation Authority revealed total super savings in 2022 fell by 3% to $3,386.9 billion, down from $3,489.9 billion.
»About 500,000 not 80,000 Australians will be affected by Anthony Albanese’s super tax change«
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