‘Excessively generous’ tax breaks on superannuation should be wound back to improve Australia’s budget, according to Grattan Institute.
The policy think tank’s report ‘Super savings: Practical policies for fairer superannuation and a stronger budget’, said super tax breaks were expected to cost $45 billion per year.
This represented 2 per cent of GDP and Grattan warned it could soon exceed the cost of the Age Pension.
“These tax breaks are not well targeted. Two-thirds of their value benefit the top 20 per cent of income earners, who are already saving enough for their retirement. Retirees with big super accounts pay much less tax per dollar of super earnings than younger workers do on their wages,” Grattan said.
“Much of the boost to super balances from tax breaks is never spent. By 2060, one-third of all withdrawals from super will be via bequests — up from one-fifth today.”
The think tank said its recommended reform package could save more than $11.5 billion per year and would create a fairer system.
Grattan’s suggested reforms included:
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