When the Federal Government in late February released its policy announcement on “A More Flexible and Adaptable Retirement Income System” it was seeking to do more than address Australia’s superannuation regime. It was, in fact, addressing the broader issue of this nation’s ageing population.
Thus, while the Government’s policy pronouncement has unquestionably injected some flexibility in the broad superannuation/retirement equation, it has certainly not addressed many of the issues which the superannuation sector regards as crucial to the debate in the lead-up to the forthcoming federal election, primarily taxation.
It is hardly surprising, then, that the Towers Perrin SuperPulse poll conducted in the days immediately following the Government’s announcement came to the conclusion that the majority of respondents did not believe the proposed changes would provide significant encouragement to people to either defer retirement or save more toward their own retirement.
In fact, 91 per cent of the respondents suggested that for the Government to achieve its goal of encouraging individuals to save more or defer retirement, it would need to address the existing tax regime applying to superannuation.
Unfortunately, while virtually everyone in the industry seems to recognise taxation as the major issue, none of the major parties seem prepared to significantly grasp the nettle. Certainly, none seem willing to make it a central plank of the superannuation policies they will ultimately take to the election.
Their reasons are easy enough to understand. Superannuation is a revenue milch cow and any reduction in the taxes applying to superannuation will undoubtedly impact on the delivery of a range of promises and programs.
However, by seeking to change the retirement incomes/superannuation structure without at the same time addressing the core issue of taxation, the major parties are denying themselves the opportunity to make self-funded retirement readily achievable for Australia’s ageing baby boomers.
The existing concessional taxation treatment of superannuation is not enough. Australians need further encouragement, and a cut to the contributions tax would be a good start.
In an ageing Australia, the taxation of superannuation is an issue that simply will not go away.
