The great superannuation debate


The debate surrounding the tax breaks for superannuation is coming to a head even though the government is still yet to determine the purpose of superannuation.

It is likely to be ruled that the purpose of superannuation is not to provide a generic tax break on savings, rather, to sustain an “adequate” standard of living in retirement. The purpose the government decides on, will be added to the law.

But what one person views as an “adequate” standard of living in retirement, others might see as a life of luxury, making it difficult to pinpoint what this “adequate” point should be.

One reference point could be the ‘‘comfortable” standard of living in retirement defined by ASFA (Association of Superannuation Funds of Australia), which estimates a couple needs $640,000 in assets in retirement, while a single person requires $545,000, to enjoy this standard of retirement living.

Another reference may be the level of assets at which someone would not be eligible even for a part Age Pension (under new rules, $805,000 for a couple, and $535,000 for a single, excluding family homes).

Australians on average already enjoy a reasonable retirement lifestyle, with middle-income retired households spending around 30 per cent less than a middle-income, working household. This may be due to people keeping retirement savings outside of superannuation, and the fact that most households now have more than one income earner with a super fund.

Two thousand Australians have at least $20 billion saved in their superannuation accounts. ATO figures show that there are 990 people with SMSFs worth $10 million or more and 944 accounts in large pooled funds with $10 million plus.


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