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Secret super plan will slug workers with higher taxes

January 14, 2021 Financial No Comments Email Email

A secret plan to tear up compulsory super by making the increase to 12% optional would be a $20,000 tax grab on the average Australian family that would also leave them with up to $200,000 less super by retirement.

Reneging on the legislated super guarantee increases would rip billions out of the pockets of workers and into government coffers via higher taxes.

Wages are taxed at a higher rate than super contributions leaving little for workers once the tax office takes its cut. ISA analysis shows that up to two-thirds of an increase could be lost in higher taxes and reductions in other government support payments.

Figures from the Government’s own Retirement Income Review reveal opt-out plans would leave all income groups worse off – with lower lifetime disposable incomes.

It would also be an administrative nightmare to manage an opt-out system – wrapping small business in yet another layer of red tape.

This underhanded plan to make super optional would force workers to pay themselves a wage increase by sacrificing their retirement savings – leaving the average 30-year-old couple up to $200,000 less at retirement.

Any Budget boost would be short-lived, as the super savings grab would lead to a far higher pension bill for future generations.

The government MPs advocating for this proposal, who all gleefully pocket more than 15% super, are determined to make Australians sacrifice their retirement savings for the government’s Budget – all while they give up nothing.

Comments attributable to Industry Super Australia Deputy Chief Executive Matthew Linden:

 “Removing the guarantee in the super guarantee to make it ‘optional’ is a recipe for higher taxes, lower lifetime incomes, and a red tape nightmare for business.”

“The Government should follow through in the legislated increase to 12 percent and not be exploring underhanded ways to renege on it.”  

“This isn’t choice – it’s a sneaky tax grab that will leave people worse off and rip up one of the system’s founding principles.”  

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