Hot topic of the week…

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Think tank group the Australia Institute has published a research paper which suggests that Australia would be better of slashing superannuation tax concessions and changing to a universal aged pension to solve federal expenditure issues.

Many of you vehemently opposed the idea, however in equal numbers were those of you who thought it made a lot of sense.

Jenni Devlin said she fully endorsed the sentiments of the Australia Institute: “The suggested pension level is a more liveable amount for those soley dependant on the age pension. Salary sacrifice up to $50,000 or $25,000 has only been possible for high income earners, never an option for most working people. Think of all the time saved by not administering an income and assets test.”

And Adviser B agreed, saying if the research figures were correct then it change is likely to save Australia a significant amount of money:  “I'm not against tax concessions for super, but admit is unfair that the rich get a 31.5% tax concession, whilst the vast majority of the population get either 0%, 5.5% or 19% as tax concessions. In these cases, it is the average and below earners who are subsidising the rich. IF the figures are correct, the average Australian is subsidising the richest Australians to the tune of $22 billion.”

A universal non means tested superannuation scheme has existed since 1935 in New Zealand and proven sustainable and equitable, said Peter Bolch: “Why should it not be such in Australia. The current system with all the fees and compliance costs and legal tax avoidance through concessions is unsustainable.”

However, Martin B said it was the dumbest thing he’s read in a long time: “At least there are people investing for their own retirement now. Slash the concessions and increase the age pension and you would cause one hell of a large funding shortfall.”

Mark Thompson agreed, and said it’s all stick and no carrot to make yourself a self-funded retiree: “So let's get this right, the well-heeled are the primary beneficiaries of current super tax concessions, while the battlers miss out. Hey Australian Institute think tank, who do you think pay mega taxes to care for the battlers? Yes, that's right the well-heeled.”

Attacking those who study and work hard to take the heat off the age pension and encouraging people to become dependent on the state is not right, said John Walker.

Andrew question the rationale put forward by the Australia Institute: “A non means tested universal pension would mean that all Australians including the wealthy would be getting the aged pension and the think tank thinks that is going to save money. No doubt they will throw SG out as won’t be required with the universal pension and the employer will pay 9.25% higher wages and no one including the battlers will have any super savings.”

Read the article and see more comments here.