‘Should be worried': Mark Bouris' superannuation warning to young Aussies

News.com.au

a day ago

Millionaire businessman Mark Bouris has warned 'every young person' in Australia 'should be worried' as debate rages over Labor's superannuation tax changes.
From July, 12 per cent of most workers' wages will be paid into their superannuation fund (a 0.5 per cent increase from the current amount). Treasurer Jim Chalmers' proposed changes, known as Division 296, would double the rate of tax levied by the government from 15 per cent to 30 per cent for superannuation balances over $3 million.
Only around 80,000 Australians, or 0.5 per cent of the population, currently have super balances above $3 million, but industry groups have warned that if the threshold is not indexed to inflation it could eventually capture the majority of Gen Zs entering the workforce today.
Mr Bouris joined the chorus in the latest episode of his Mentored+ podcast, arguing Labor's super tax on unreleased gains will put more – not less – pressure on young people.
'Every young person in the country should be worried about this, and I'll tell you why: because every old person in the country has experienced building their superannuation up with only 15 per cent tax rate from day 1, for the last 30, 40 years, since (then-Prime Minister Paul) Keating introduced it in the early '90s,' he said.
Compulsory employer contributions to superannuation were introduced by Mr Keating in 1992, at the time requiring them to kick in 4 per cent.
According to a recent study by the Association of Superannuation Funds of Australia (ASFA), some $4.2 trillion of superannuation is held by Australian workers, while household savings have been boosted by more than $500 billion since compulsory super's inception.
'We've had this, all of us had this fantastic low-tax situation with the money we earn in our super fund,' Mr Bouris said.
'Now, young people who accumulate more than $3 million worth of assets – and they will – will not have the same benefits that everyone else has had since Keating introduced this legislation.'
Mr Bouris suggested the former leader 'must be just feeling completely demoralised and probably, to some extent, betrayed' by the expected changes, which he described as 'the envy of the rest of the world … put there to take the strain off government'.
Last August, Mr Keating warned the 'unconscionable' doubling of tax on retirement savings could turn superannuation into a low- and middle-income pension scheme and damage community confidence in the system he had created.
'All (Labor's changes) is going to do is put more strain on government when people retire, because people are not going to retire with enough money because they are going to be paying too much tax – and the people who are going to be affected by that most is anyone starting work today, any new young person,' Mr Bouris continued.
'So if you're a young person and you're saying, 'Oh, this is great', because you're gonna get rich people to transfer the wealth across to the younger people – uh-uh.
'You will be transferring it to your kids – and it's going to keep going like that forever, and this $3 million at some period of time will be worth, like, $100k, like a hundred grand's-worth today, because the time value of money just keeps creeping and creeping and creeping.'
Labor first announced the crackdown on tax concessions for very large super balances in 2023, but the legislation was blocked by the previous Senate. The changes – expected to initially claw back $2.7 billion a year and nearly $40 billion over a decade – now look likely to become law as a deal with the Greens looms.
'What we need to do is make sure that our superannuation system is fair,' Prime Minister Anthony Albanese said last week.
'That is what we are setting out to do.'
Division 296 will also be applied to defined benefit pensions — an older style of superannuation scheme that was common in public sector and local government workplaces until the 1990s. A defined benefit pension guarantees the amount you will receive in retirement.
The move to include it in the new tax changes are to ensure 'commensurate treatment' as high-balance super funds — although unlike super account holders, those eligible will be able to defer the payments until they retire.
Interest will be charged annually on the deferred tax liability at the 10-year bond rate, currently at around 4.5 per cent.
Treasury estimates that 10,000 members with defined benefit interests will be impacted by the new tax in 2025-26, 'representing approximately 1 per cent of the total population with DB interests'.