Super concessions not so generous: report
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CANBERRA, Feb 11 AAP
February 11 2013, 2:04PM
Tax concessions within Australia's superannuation system are not as generous as those in other countries.
A new study shows the net retirement benefits of an average British worker is 16.4 per cent - or $43,534 - higher than their Australian counterpart.
The research by consultant Mercer was released on Monday amid speculation the federal government could tinker with the tax concessions to generate budget savings.
It compares Australia to eight other countries considered to have the best pension systems in the world: Canada, Chile, Denmark, Netherlands, Sweden, Switzerland, the UK and US.
Mercer senior partner David Knox says tax treatment of superannuation can be controversial because the greatest benefits are inevitably received by those who participate to the greatest extent - primarily higher income earners.
"However, it's also important to look at our retirement savings system in its entirety and the impact altering the tax model could have on the future costs of funding the age pension," he said.
Australia is the only country of all nine that charges a tax rate on employer contributions, at 15 per cent, and the only one not to offer employee tax deductible contributions.
It's also one of three to have a tax rate on investment income, alongside Denmark and Sweden.
This has a direct impact on the final benefit received by retirees, and in many cases increases the likelihood of people receiving an age pension, Mercer says.
Australia makes no impost on pension benefits after the age of 60. Chile is the only other country with the same regime, although its workers generally have lower incomes.
But Australia does have the lowest contribution cap - at $25,000 per annum - which is significantly short of other countries when expressed as a percentage of average earnings.
"We believe increasing concessional caps, particularly for those aged over 45 should be a priority for government, rather than reducing super tax concessions," Mercer managing director David Anderson said.
"Higher superannuation benefits due to increased contributions, improved investment returns or lower taxation will lead to less pressure from the ageing population in future budgets."