Australia Plans to Limit Early Access to Retirement Funds, Cut Tax Breaks
On Thursday, Australia's center-left Labor Party government announced plans to change superannuation rules, reportedly including restricting early access to funds and limiting tax breaks for high-earners. The changes come as pressure continues to mount on the federal budget....
- On Thursday, Australia's center-left Labor Party government announced plans to change superannuation rules, reportedly including restricting early access to funds and limiting tax breaks for high-earners. The changes come as pressure continues to mount on the federal budget.1
- Prime Minister Anthony Albanese insisted that no major changes are being considered to the way the $3.3T retirement savings system is managed beyond defining its objective in law.2
- Speaking in Adelaide with South Australian Premier Peter Malinauskas, the PM claimed that the then-ruling Coalition made four significant changes to superannuation in 2016, allegedly undermining the system 'at every single opportunity.'3
- This long-term investment plan — often shortened to 'super' — is based on money being put aside by the employer which can be withdrawn upon the employee retiring or turning 65 years old. Early access is taxed at 45%, except in extraordinary circumstances.4
- Treasurer Jim Chalmers has warned that reform is needed after former PM Scott Morrison allowed early withdraws up to AU$10K that cost funds nearly AU$36B, as well as due to tax concessions to before-tax contributions, which are expected to cost the government AU$52.6B in 2022-23.5
- Concerns that the tax concessions could aggravate inequality in Australia prompted assistant treasurer Stephen Jones to state in January that, after legislating an objective for super, the government planned to review it.6
Sources: 1Reuters, 2Daily Mail, 3The sydney morning herald, 4Ato, 5News.au and 6Guardian.
- Left narrative, as provided by Guardian. Though obvious that the objective of superannuation should be to provide retirement incomes for older Australians, the Coalition has sought to transform it into a solution to everything from housing affordability to healthcare problems, while the wealthy use the system to evade taxes. The reforms proposed by the Albanese government are a decent starting point from which to begin rectifying the superannuation.
- Right narrative, as provided by Sky news. It is disgraceful that Labor is characterizing the decision to allow people to access their funds during the pandemic merely as a cost to the taxpayer when they are actually motivated by a problematic plunge in liquidity for the current administration. The party's ultimate goal is crystal clear: to restrict Australians from using their own money so that the Albanese Cabinet can plunder it to fund spending without the need to drastically alter the national budget.