THE federal Treasurer has said he intends to commission a review of the retirement income system, including the interaction of superannuation, government pensions and, potentially, taxation.
The Productivity Commission’s review of the efficiency and competitiveness of superannuation, released in December last year, recommended to the Australian Government that it initiate a broader review of the retirement income system, including super, pensions and taxation.
However, one outcome of the future review appears to have already been pre-empted by the Prime Minister’s pledge not to change the taxation of superannuation.
The Productivity Commission wanted an independent assessment of whether the compulsory superannuation system set up in 1993 was achieving its original stated objective of raising national savings by increasing private savings and taking pressure off the government budget.
The Productivity Commission wanted an inquiry to explore if any reduction in reliance on the government pension helps the federal budget, given that higher-income earners receive big superannuation tax breaks.
The Productivity Commission also wanted to see if compelling workers to forgo a portion of their salary in favor of deferred superannuation savings benefits the poor and wealthy fairly. Low-income earners make a relatively large immediate sacrifice of forgone income they could spend today, while the wealthy receive big superannuation tax concessions. The Commission said the inquiry should be conducted before compulsory super is increased from 9.5 per cent of wages to 12 per cent, due to be phased in between 2021 and 2025.
But this doesn’t deter the Treasurer, who has pre-empted another outcome of the retirement income review by saying the government has no plans to change the compulsory superannuation contribution rise from 9.5 per cent to 12 per cent.
It seems, therefore, that we’re going to have a review of the retirement income system, including the interaction of superannuation, government pensions and taxation, with the proviso that taxation of, and contributions to superannuation will not change.
That only leaves the pension and its interaction with nothing much at all.
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