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Age pension more of a drain than tax concessions: FSC
The Government needs to review age pension eligibility to ensure it is sustainable, according to the Financial Services Council (FSC).
In its 2013-14 Federal Budget submission to Treasury, the FSC said age pension eligibility was undermining Australia's superannuation system.
A couple who own their own home with $750,000 in savings and an annual income of $45,000 are eligible for over $10,000 in age pension entitlements, the industry body pointed out.*
Government should phase in a new preservation age of 62, which would increase retirement savings by $400 billion, it said.
FSC chief executive John Brodgen said claims that super tax concessions were unsustainable were wrong.
"Superannuation taxes will grow over 200 per cent within the next eight years.
"Earnings tax on a large and growing pool of national savings is clearly a source of revenue for the Government under current policy settings," he said.
The $14 billion in super tax concessions was modest compared to the $82.5 billion collected in mandatory super contributions in 2011/12, it said.
"This is a modest level of support for a mandatory system that requires all working Australians to lock away 9 per cent of their income for up to 40 years," it said.
Brodgen called on both sides of politics to refrain from making any more changes to the super system between now, the next election and the first term of Parliament, and to prepare an Intergenerational Report this year to show the effect of recent reform and tax changes to super.
* Correction: This sentence originally stated that a homeowning couple with $750,000 in assets and an annual income of $45,000 are eligible for 'over $100,000' in age penion entitlements. The correct figure is 'over $10,000'.
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