Opposition Warns Australian Self-Funded Retirees Over Labor Superannuation Plan

A bookie holds money at The Melbourne Cup Carnival meeting at Flemington Racecourse Nov. 6, 2007 in Melbourne, Australia. Quinn Rooney/Getty Images

Australian opposition leader Peter Dutton has warned that any plans by Labor to raise superannuation tax would be “detrimental” to Australians’ retirement plans.

The comment comes after Treasurer Jim Chalmers hinted at a cap on super balances over $3 million in the May budget, saying it will make super concessions more “affordable and sustainable.”

If implemented, the policy is expected to affect less than one percent of Australians who have more than $3 million in super. Chalmers noted that average balances for people in that upper category were about $5.8 million.

‘When They Run Out Of Money, They Come After Yours’

Dutton argued that self-funded retirees, part pensioners and those who are looking forward to retirement would also struggle, if Labor raised the superannuation tax.

The opposition leader warned that the government would target the wealthiest retirees before working their way down.

“They‘ll just keep coming back to the well, and all of a sudden you’re a couple of rungs down, and people who didn’t think they were in line, they’ll be having to pay additional tax,” he told 2GB radio on Thursday morning.

Dutton said that people who have worked hard and put their own money aside into superannuation “don’t want the government changing the rules and taxing it effectively retrospectively.”

“People might have had a windfall from a house sale, they might have inherited some money, they might have sold their small businesses and rolled that money into superannuation,” he told reporters in Aston, Victoria, on Feb. 22.

“In that scenario, if they’ve invested in shares or in a portfolio which has gone up significantly in value, they’ve done it according to the rules and they’ve done it because they want to support their retirement.”

Dutton added, “Labor’s always been this way; when they run out of money, they come after yours.”

“The changes that they’re proposing to superannuation, I think, are going to be detrimental to people’s retirement plans.”

In Australia, employers pay 10.5 percent of their income into workers’ superannuation funds, which is generally taxed at 15 percent.

Meanwhile, the tax rate for super contributions of up to $27,500 a year is 15 percent and above that benchmark is 30 percent.

Labor Assured No Big Changes Coming To Superannuation Tax

However, Prime Minister Anthony Albanese on Wednesday insisted that Labor would not make major changes to superannuation in the upcoming May budget.

“We said during the election campaign that we did not intend to make big changes to superannuation. And we don’t,” he said.

The country’s peak superannuation lobby group Australian Institute of Superannuation Trustees, have backed a $5 million cap on super balances, which is predicted to affect about 11,000 people.

Meanwhile, the Grattan Institute has called for a tax threshold of $2 million on super earnings, meaning people will need to pay more tax on funds exceeding that amount.

Assistant Treasurer Stephen Jones said he was not singling out the self-managed sector for an attack.

“But it is timely to have a conversation about what a dignified retirement means in the context of a sustainable retirement system,” he said at an SMSF Association conference, a body representing Australia’s self-managed super fund sector.

Speaking at a superannuation conference on Monday, Chalmers said the objective of superannuation is to “preserve savings to deliver income for a dignified retirement.”

He subtly criticised the Morrison government’s decision to allow Australians to withdraw up to $20,000 of their super over two years to cope with financial difficulties during the COVID-19 pandemic. Up to $36 billion have been withdrawn.

“Without consultation, and little consideration, Australians were forced to choose between better incomes for retirement or paying their bills,” Chalmers said.

“Funds were forced to liquidate assets, and $36 billion of Australians’ retirement savings were lost.

“Our government will take a different approach.”

But Nationals MP Barnaby Joyce said the Coalition’s move was necessary during an economic crisis.

“They want to buy their own house, a lot of people want their own business … Superannuation is a great program, but I don’t think you should rule out letting people have access to their own money,” he told Sunrise.

AAP contributed to this report.