Super opt out plan a 'tax grab': ISA
The proposed Government plan to allow Australians to “opt out” of compulsory super by making the superannuation guarantee (SG) increase to 12% optional will be a “tax grab” on the average Australian family, according to Industry Super Australia (ISA).
The ISA said it would be a $20,000 tax grab on the average Australian family that could also leave them with up to $200,000 less super by the time they retire.
“Reneging on the legislated super guarantee increases would rip billions out of the pockets of workers to be funnelled into government coffers via higher taxes,” it said.
“Wages are taxed at a higher rate than super contributions leaving little for workers once the tax office takes its cut.
“ISA analysis shows that up to two-thirds of an increase could be lost in higher taxes and reductions in other government support payments.”
It said figures from the Government’s own Retirement Income Review showed such a plan would leave all income groups worse off - with lower lifetime disposable incomes.
“It would also be an administrative nightmare to manage an opt-out system – wrapping small business in yet another layer of red tape,” it said.
“This underhanded plan to make super optional would force workers to pay themselves a wage increase by sacrificing their retirement savings – leaving the average 30-year-old couple up to $200,000 less at retirement.
“Any Budget boost would be short-lived, as the super savings grab would lead to a far higher pension bill for future generations.
“The government MPs advocating for this proposal, who all gleefully pocket more than 15% super, are determined to make Australians sacrifice their retirement savings for the government’s Budget – all while they give up nothing.”
Matthew Linden, ISA deputy chief executive, said making the SG “optional” was a recipe for higher taxes, lower lifetime incomes, and a red tape nightmare for business.
“The Government should follow through on the legislated increase to 12% and not be exploring underhanded ways to renege on it,” Linden said.
“This isn’t choice – it’s a sneaky tax grab that will leave people worse off and rip up one of the system’s founding principles.”
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
