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Australian superannuation could be 750 billion USD worse off: opposition

Xinhua, March 11, 2015 Adjust font size:

Australia's federal opposition leader warned on Wednesday the country's superannuation pool could be 750 billion U.S. dollars worse off by 2055 and place extra pressure on the age pension system.

In a lecture in his former law school at Melbourne's Monash University, Opposition Leader Bill Shorten said the decisions by Tony Abbott's government to freeze the superannuation guarantee rate at 9.5 percent until July 2021 and to scrap the Low Income Super Contribution (LISC) in 2017 would cost the average 25-year- old earner 75,000 dollars by retirement age.

Meanwhile, an expert said he doubts the system will last 40 years, claiming loopholes in the Australian superannuation system were costing the national bottom line up to 23 billion dollars annually.

Shorten said the government had effectively raided the accounts of low-income earners.

"Last year, the government froze superannuation for nearly 11 million Australians, twice," Shorten said.

"How can the government claim a fair pension is unsustainable while trying to wreck our superannuation system - the single best method for easing pressure on pensions and giving all Australians dignity and security in retirement?"

Currently, while the income tax rate in Australia is proportional, money taken from super is taxed at a flat rate of 15 percent. Those aged over 65 can access their super funds tax-free.

Richard Denniss from a progressive think tank, the Australia Institute, told News Corp on Wednesday the flat rate was " ridiculous" and called the system "broken" and "unaffordable". "There's a very clear problem at the moment: tax concessions go disproportionately to the wealthy. We could fix that and we could save the Budget a lot of money," Denniss said.

Denniss blamed both sides of politics for the issues, saying they sought to please older, high-income Australians and the superannuation industry. Endi