The Association of Superannuation Funds of Australia recently released a research report highlighting the positive impact of recent changes to superannuation tax settings on the equity of the system 📊. The report found that measures such as the Transfer Balance Cap and additional tax on balances above $3 million are addressing the minority of cases with very large balances, while the majority of people pass away with little or no super 💼.
The introduction of higher tax rates for balances over $3 million is projected to lead to a 9.5% decrease in tax concessions related to investment earnings 📉. Those affected are mostly aged 60 and over, with around two-thirds being male and half of them retired 🧓👴.
Interestingly, the research also revealed that insurance through superannuation is an effective redistributive mechanism, delivering substantial benefits to those most in need in Australian society 🇦🇺👥. As superannuation account balances increase, more retirees have substantial private incomes, resulting in only around 40% of Australians aged 66 to 69 currently receiving the Age Pension 🧓💵.
Without super, there would be over 500,000 extra individuals receiving the Age Pension, putting a strain on the system 📈. ASFA Deputy CEO Glen McCrea suggests that the upcoming federal budget provides an opportunity to further improve equity in Australia’s superannuation system by introducing Superannuation Guarantee (SG) payments on paid parental leave and increasing the upper threshold for the Low Income Superannuation Tax Offset (LISTO) 📝💡.
