Actually, it was that very day
The peak body representing super funds has offered the Treasurer an olive branch saying it would be prepared to consider reduced or zero tax concessions on super accounts with very high balances.
“The aim of the retirement income system is to have enough, it is not being able to amass millions and millions of dollars in a tax-free environment,” Association of Superannuation Funds chief executive Pauline Vamos said Thursday.
“If we could establish a size of fund that would guarantee a comfortable retirement, we could have a lifetime cap.”
“Any good retirement system must have a ceiling. We are talking about tax concessions funded by the Australian community.
Ms Vamos said her Association and the government were not far from an agreement.
“They are still in listening mode, she said. “We’ve had constructive conversations.”
The Association’s key concern was that the earnings of super accounts not be taxed at different rates depending on the owner’s income, something that would be difficult to administer.
Instead the earnings could be taxed at a higher rate when the size of each account passed a certain benchmark.
Ms Vamos nominated $2.5 million as a benchmark, saying such an account would replace 60 per cent of the income of someone on $180,000 - providing them with $100,000 per year if they lived into their nineties.
“That ought to be enough for a comfortable retirement,” she said.
Asked why the benchmark was so high she said an aging population would bring with it higher health and end-of-life costs. “We want retirees to be self sufficient and we want them to be consumers of the future,” she said. “But we need a ceiling.”
The body representing industry super funds will take a different tack Friday issuing a position paper on behalf of its 16 fund members calling for a moratorium on changes until after the election when the new government should set up an independent review.
“We recognise there is a legitimate debate about the sustainability of the system,” said Industry Super Network chief executive David Whiteley.
“But we need it conducted away from the election campaign.”
“The first thing the inquiry should do is identify the size and the growth of the tax concessions. The Treasury says they cost $32 billion and will climb over the next three years to $45 billion. These estimates have been questioned by some academics and some industry groups.”
“Once we work out the size of the concessions and establish what is a sustainable size we can discuss their distribution.”
“Anecdotal evidence suggests high wealth individuals are using self-managed super in particular as a preferred vehicle for tax minimisation.”
“This will concern whoever is in power after the election.”
“A reasonably considered thoughtful review could get bipartisan support for stable settings for the medium to long term. But that I mean 5 to 10 years.”
John Brogden, chief executive of the Financial Services Council said he wasn’t too fussed about there was a formal inquiry, but a regime had to be put in place that would last five years.
One idea would be to tie regular inquiries to the Treasury’s Intergenerational Report. “After they produce that every five years we could reexamine superannuation, leaving things unchanged in between,” he said.
All three industry bodies called on the Coalition not to touch the Low Income Superannuation Contribution introduced by Labor this financial year. Coalition leader Tony Abbott again said he would abolish it claiming the government itself could not afford it because it was to have been funded by the underperforming mining tax.
In The Sydney Morning Herald and Age
. Skewed. Why Labor is finally rounding on super tax breaks
. The outrage. Why Labor has to act
. Treasury versus Knox. Who has it right?