The Albanese government in Australia said on Thursday it is planning to change superannuation rules to limit tax breaks for high-earners.
It said the cost of giving tax breaks and allowing citizens early access to funds before they retire is costing the government huge sums.
The Treasurer has suggested they want to limit tax breaks and deductions for citizens with at least $3 million in their accounts.
The Labor government earlier this week launched a consultation on reforming superannuation – or retirement fund – saying it wanted the A$3.3 trillion ($2.3 trillion) pension system to become sustainable and equitable in the face of mounting pressure on the federal budget.
“We are not trying to revolutionise the system, but there are questions to be asked,” Assistant Treasurer Stephen Jones said in a speech to the Self Managed Super Fund Association.
“With the budget under increased pressure to meet the costs of essential services like health age, aged care … we need to consider reforms that put all elements on a more sustainable basis.”
Jones said restricting early access to funds is “fundamental” as it supported retirement incomes.
Australia’s annual deficit is expected to widen to around A$50 billion ($34 billion) by 2025/26 and total debt to balloon to A$1.16 trillion, or 43% of gross domestic product, according to government figures.
Federal Treasurer Jim Chalmers estimates tax breaks on superannuation will cost the budget more than pensions by 2050.
Less than 1% of personal superannuation accounts had a balance of more than A$3 million and the average among that group was A$5.8 million, who could still avail tax concessions, he said on Wednesday, hinting at some controls for rich members.
The main opposition Liberal party said it would oppose any move by the government to tweak superannuation rules. Shadow Treasurer Angus Taylor told Sky News the savings of Australians were “not a piggy bank for the government to tax and spend.”
The chief of Australia’s biggest pension fund, AustralianSuper, in November warned against government efforts to tap into retirement savings worldwide.
- Reuters with additional editing by Jim Pollard