The Federal Government has received an 11th hour plea not to use tonight's Budget to tinker within the superannuation rules in a manner that would adversely impact retirees.
FIIG Securities head of thought leadership, Craig Swanger, said that before making any changes to the super rules the Government needed to remember that the official cash rate had fallen from 7.25 per cent In 2008 to just two per cent last week and had cost retirees $81 billion in lost income, leaving them vulnerable to any tightening of superannuation rules.
Swanger said that mid-life homeowners had gained because of lower mortgage rates but retirees were a massive $20.3 billion worse off each year because of the interest rate cuts.
"Since rates peaked in March 2008, the total income lost by retirees is $81 billion," Swanger said. "If there is any silver lining in such an appalling figure, hopefully it is that the Treasurer will recognise the stress on retirees and avoid changes to superannuation taxation in tonight's budget."
Swanger said he was not blaming economic policymakers for the losses but it was important to recognise the disproportionate impact of the cuts on retirees.
"Since 2008 the interest saved by those below retirement age is higher than the losses to retirement age households, meaning more money is available to the average household," he said. "But the losers are definitely the retirees. There has been a massive transfer of wealth from retirees to mortgage holders."
According to FIIG's research, people aged 25-35 were $56 billion better off over the period, those aged 35-45 were ahead by $71 billion, and 45-55 year olds were up $49 billion but after the age of 55, when mortgages are smaller and savings are greater, the losses quickly accumulate, with 55-65 year olds down $13 billion, 65-75 year olds behind by $32 billion, and those over 75 down $36 billion.
Swanger said SMSF investors had received some compensation for the losses because of gains in the share market but last week's dramatic collapse in CBA shares showed this was a poor substitute for income.
"The massive 55 per cent average gain in bank stocks since 2008 makes up around half of this lost income, but this is paper gains, not real income like the income they have lost," he said.