What’s really wrong with Australia’s superannuation system? 20 billion a year in fees, writes Phased draw crocodile for kids Kohler.
And what a bleak discussion it is – seagulls squabbling over chips at the beach. We have stopped talking properly about reform of the system to fix its many failings, only the taxation of it, and that’s for the simple reason that it’s a flat tax in a regime that is otherwise progressive. As a result, Treasury bureaucrats constantly explain to politicians that most of the benefits of super tax concessions go to high-income earners, which is what happens with a flat tax: well-off people get to keep relatively more cash than those on lower salaries. 300,000, depending on which report you read, would be taxed more. 300,000 from 15 to 30 per cent.
And who can complain about taxing the “fabulously wealthy” more than the wretchedly poor? But now we have to have a debate about where, exactly, the line is between fabulous and wretched these days, given that everyone is burdened by so much debt. Perhaps the taxation of super contributions should simply be a discount on a person’s top marginal rate, so the same scales apply and we can all get on with life and stop talking about the taxation of super. Maybe then we can talk about what’s really wrong with super, which is that nobody knows what they will have to live on in retirement, so they don’t know if they are saving enough – and almost nobody IS saving enough – and absolutely everybody is paying too much in fees. What’s more, the means test of the age pension encourages retirees to spend their super lump sum so they qualify for more of the pension. Most other countries require at least part of the benefit to be paid as income. Some wise people have written in recent days that the problem with super in Australia is the post-retirement end, not the pre-retirement saving part of it.