Retirees fear how their super will be targeted in budget

The federal budget will detail at least one tax hit on superannuation, but older Australians worry what will come next.

Senior Australians are worried that the federal government’s recent move to lift superannuation taxes will herald more bad news in Tuesday’s budget.

While the federal government has ruled out scrapping the generous stage three tax cuts for middle and high-income earners, people who spent a lifetime building a decent nest egg fear it is becoming a target.

Association of Independent Retirees national president Wayne Strandquist said seniors were worried about many “politically adverse ideas” being canvassed that targeted retirees’ assets.

He said these included limiting superannuation concessions and taxing all retirees’ earnings at 15 per cent in their pension phase – compared with zero tax today.

“Just about every think tank going around seems to be coming up with ideas on how they can tax the wealth of older Australians to get more money for young people,” Mr Strandquist said.

Wayne Strandquist says retirees worry about goalposts moving. Picture: Jonathan Ng

“Our members have saved for 30 years so they can retire comfortably, and are very concerned that they did that in the belief there would be no increased taxes in retirement, and are finding they are now under the pump from different directions.

“They are concerned about changing the goalposts when they get there.”

The government’s plan to increase tax by 15 per cent on super balances above $3 million from 2025, announced in February, initially impacts just 1 per cent of people, but its lack of indexation lifts that to 10 per cent in the coming decades, including potentially two million current young Australians.

Wealth for Life Financial Planning principal Rex Whitford said he hoped the budget would focus on repaying national debt, and he believed the recent super tax changes were used to gauge what the public would accept.

“I think they tested the waters a little bit … what else do they do around that level? he said.

“They might muck around a bit with capital gains tax.”

Mr Whitford said many seniors had spent their lives making extra super contributions and investments to build savings lawfully “and the government is changing the rules”.

“People saved and lost the utility of that money for decades, and when they are successful the government says you are a fat cat and are ripping us off,” he said.

Among more than 730 pre-budget submissions were calls for:

• More superannuation and retirement guidance services.

• An inquiry into the cost of ageism.

• Tax deductions for financial advice.

• A review of Australia’s investment taxes.

• Measures to remove workforce participation barriers for over-50s.

Seniors are struggling with higher living costs and threats to their retirement savings.

Mr Whitford said last week’s announcement of large pay rises for aged care workers was a positive step.

“We are heading for a cliff with aged care, so at least we are bringing people in from overseas to do the job,” he said.

Mr Strandquist said combating rising living costs was difficult because unlike workers who were able to negotiate higher wages, retirees often had fixed incomes.

“Retirees have two options – seek higher investment returns and take whatever risk that requires, or draw down their capital faster from superannuation,” he said.

“Neither are good options.”

Originally published as Retirees fear how their super will be targeted in budget