New analysis from the Australia Institute shows that superannuation tax concessions are almost as large as the cost of the aged pension and growing at twice the rate.
- According to the latest Treasury release of the Tax Benchmark and Variations Statement, superannuation tax concessions are expected to reach $41.3 billion in 2019-20 and grow over the next three years to $52.5 billion in 2022-23.
- Superannuation tax concessions are growing rapidly set to rival the aged pension in cost within the next few years; over the next three years these concessions are expected to increase by 25.2%, twice the growth rate of the aged pension (12.6%).
- In comparison, Commonwealth funding for assistance to the aged – which is made up almost entirely by the aged pension – will reach $48.5 billion in 2019-20 and rise to $54.59 billion in 2022-23.
- Women retire with substantially less super than men, the median super balance for women at retirement is $36,000 while for men it is more than three times that at $110,000; 40 percent of older single retired women live in poverty.
“Superannuation tax concessions were initially designed to help Australia become less reliant on the aged pension, but with the rapid increase in the concessions they will soon become even more costly. These tax concessions are big, getting bigger, and plainly unfair,” said Matt Grudnoff, senior economist at the Australia Institute.
“Compulsory superannuation and the concessional nature of the Australian taxation system were introduced in part to alleviate budget pressure.
“This represents a spectacular failure of policy as superannuation tax concessions designed to reduce the budget cost of the aged pension have themselves grown rapidly and look to soon cost taxpayers more than the aged pension itself.
“Such high rates of poverty in retirement is in part because so much of the taxpayer funding for retirement incomes goes to high income households in the form of superannuation tax concessions. The rapid growth in these tax concessions will only make this worse.”