Australians with multimillion-dollar retirement savings have found themselves at the centre of another political clash over the superannuation system.
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The Albanese government waded into controversial territory this week by starting an open-slather debate about super, including on how it's taxed and if people should be able to tap into it before they retire.
Federal ministers have been alluding to possible changes to super concessions for months, but the discussion really kicked off on Monday with a proposal to enshrine an objective for superannuation into legislation.
The proposed definition, "to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way", was accompanied by explanations for the carefully chosen wording.
The choice of "sustainability", for example, refers to the cost-effectiveness of the super scheme and questions the appropriateness of tax concessions for high-income earners.
With budget repair top of mind for Jim Chalmers, the treasurer has alluded to tweaks to tax breaks on super as a possible revenue-boosting venture.
These concessions, which include a flat 15 per cent tax rate on contributions in the accumulation phase and tax-free investment earnings in the retirement phase, were introduced to encourage people to save more money for their post-work years.
But there's an argument that these concessions disproportionately benefit the wealthy and are being used to minimise tax and pass on accumulated wealth to their children, exacerbating intergenerational inequality.
There's no shortage of options floating around to improve the fairness and affordability of the system, but Dr Chalmers and Assistant Treasurer Stephen Jones have herded the conversation towards a possible cap on super balances.
A pathway favoured by the Association of Superannuation Funds of Australia - albeit at a high $5 million threshold - such a cap would stop high-income earners funnelling money into their super at a lower tax rate than they pay on their personal income.
The opposition and several "teal" independents from wealthy electorates have voiced concerns about possible changes to concessions.
The coalition says it's not fair to shift the goalposts on those saving for their retirement and any changes would constitute a broken election promise after Anthony Albanese said during the campaign he had no intention of touching super.
The prime minister has since repeatedly stated Labor plans to make "no major changes" to superannuation, although he has called out the coalition's hypocrisy for increasing taxes on super while they were in office.
But the Greens and key independents needed to pass legislation through the Senate, including David Pocock, Jacqui Lambie and Tammy Tyrrell, have expressed willingness to discuss changes to super concessions to stop tax avoidance.
Peter Burgess, the deputy chief of the Self Managed Super Fund Association, said there were already mechanisms in place to stop people from accumulating large super balances.
He told AAP relatively recently introduced caps on concessional contributions and sums that can be moved from the accumulation phase to the pension phase were designed to force large amounts of money out of the system eventually.
"This is a legacy issue - the way the caps are designed to work right now is that these amounts will be washed out of the system over a period of time," he said.
But for Australian National University tax expert Robert Breunig, there's a strong argument for super tax concession reforms on the basis of fairness.
However, he said the government was overestimating how much money could realistically be gained from such reforms.
Beyond concessions, Labor has raised the question of how tightly to preserve super for retirement in the hopes of stopping schemes that allow early access, such as the one implemented by the coalition government during the COVID-19 pandemic.
But the now-opposition has doubled down on its position, arguing that super should be accessible for people under extenuating circumstances and even to fund a deposit on a home.
On Friday, deputy opposition leader Sussan Ley said owning a home was essential for a person's financial independence and it made sense to tap into super early for such purposes.
Also attracting attention is the government's interest in enticing the $3.3 trillion super pool towards "double dividend" investment opportunities that benefit the nation as well as delivering strong returns for members.
The opposition says the government is trying to use individuals' money to fund its nation-building agenda and that super funds should remain focused on generating returns for members.
Australian Associated Press
