Major superannuation change by Albanese government could affect 200,000 people under 30 – thousands more than first claimed

Prime Minister Anthony Albanese’s government is being warned more than 200,000 Australians under 30 stand to be affected by Labor’s superannuation changes.

Draft legislation has this week been released with a plan to double the concessional contribution rate to 30 per cent for those with more than $3million in retirement savings.

The government claims this will only affect 80,000 people or 0.5 per cent of the population as everyone else continued paying a 15 per cent concessional tax rate.

But the Financial Services Council, which represents retail super funds, argues the proposal would hurt 500,000 existing taxpayers, including 204,000 under the age of 30.

Acting chief executive Spiro Premetis said the planned $3million cap – with no plans to index it for inflation – would end up hurting the young more, as their retirement savings grew.

‘Leaving the cap stuck at $3million will mean that in today’s dollars a 30-year-old will have a real cap of around $1 million, calling into question the intergenerational fairness of an unindexed cap,’ he said. 

Treasurer Jim Chalmers unveiled the plan in February in a bid to save $2.3billion a year in forgone government revenue.

Dr Chalmers and Assistant Treasurer Stephen Jones this week argued it was only a modest proposal.

‘This modest adjustment to apply after the next election will affect only a handful of people,’ they said.

‘The change will not alter the amounts of money people can put into super, and it applies to future earnings – it’s not retrospective.

‘The amendments are consistent with the government’s proposed objective of superannuation, to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.’

The changes would come into effect on July 1, 2025 should Labor be re-elected in that year. 

Shadow treasurer Angus Taylor said this would be a broken promise.

‘First and foremost, this is a broken promise,’ he said.

‘Labor said before the last election they wouldn’t change the rules around superannuation. They wouldn’t raise taxes. 

‘This is a broken promise. It’s higher taxation on superannuation.’

During the May 2022 election campaign, Mr Albanese told a Sky News reporter that he would not meddle with retirement savings if Labor was elected.

‘We’ve said we have no intention of making any super changes,’ he said.

Financial Services Council, which represents retail super funds, argues the proposal would hurt 500,000 existing taxpayers, including 204,000 under the age of 30 (pictured is Sydney’s Royal Randwick Racecourse)

Consultation on the super proposal closes on October 18, with the Greens last month indicating they would vote with the Coalition to block the legislation unless super was added to paid parental leave.

Young people typically had very little super with men aged 25 to 29 having a median balance of $17,243 compared with $17,528 for women of the same age group, Australian Taxation Office data for 2020-21 showed.

Former Liberal treasurer Peter Costello introduced generous tax concessions for super contributions in 2006.

The Australia Institute think tank estimated the super tax concessions cost the budget $52.6billion a year, almost as much as the $55.3billion spent on the aged pension.