The federal government has made it clear it wants to have a conversation about changing our superannuation system to potentially save the budget tens of billions of dollars.
While the government has said it's not looking to overhaul the entire system, it hasn't ruled out introducing changes in May's federal budget.
So, what changes are being suggested? And which ones have been ruled out?
Tax concessions
Earlier this week Treasurer Jim Chalmers raised concerns about super tax concessions costing more than the age pension by about 2050.
Under the current scheme super contributions — made by your employer or by you — are taxed at a lower rate than the personal income tax rate.
That means people who make extra contributions to their super both boost their retirement savings and reduce the amount of personal income tax they have to pay.
The former government's retirement income review found some Australians had used the system to build up multi-million-dollar super balances.
When pressed on Wednesday on whether changes to concessions could be implemented in the May budget, Mr Chalmers wouldn't rule it out.
"We haven't changed our view, we haven't taken any decisions in this area," he said.
Assistant Treasurer Stephen Jones flagged any changes would be likely targeted at the wealthy.
"So we [have] got to have a debate about how much we are willing to continue to subsidise these mega-sized, oversized superannuation balances that clearly aren't about retirement income," he said.
Capping super balances
An idea being floated by the government is whether superannuation balances should be capped.
"What we're thinking about is what is a reasonable amount of money which is consistent with that objective of having savings, tax-assisted savings for retirement income," Mr Jones said.
"Let me be very clear, this is not about the government saying to people you can't save more than $5 million, $10 million, $100 million for their retirement."
Mr Jones argues the money sitting in people's super accounts that attracts low tax rates means taxpayers are missing out on millions that could be going back to the budget.
More than 11,000 Australians have more than $5 million in their super balance according to Treasury figures.
In its pre-budget submission, the Association of Superannuation Funds of Australia Limited (ASFA) recommended that group of people should not receive the same tax concessions as others.
"Those members aged 65 or older with a total superannuation balance as at 1 July 2023 in excess of $5 million … should be required to withdraw the excess out of superannuation or in the alternative pay tax at the top personal income tax rate on the investment returns attributable to the amount of the superannuation balance over $5 million," the submission said.
CEO Martin Fahy said the suggestion was based on the retirement income review, which raised questions about sustainability.
"We have gone through a process with our members and there is general agreement across the sector that amounts above $5 million are no longer appropriate in terms of the long-term equity and sustainability of the system," he said.
"The projected savings from our modelling suggests about $1.5 billion of savings in tax concessions."
The Grattan Institute's Economic Policy Program director Brendan Coates suggested the cap should be set at $2 million.
"I think most people would accept that having very generous tax concessions on super balances above $2 million is excessive, and is inconsistent with the purposes of super," he said.
"At a time, when we've got big spending pressures and demands in aged care, health care, disability, defence, it's going to be hard to justify the tax concessions that we're offering in super that are overwhelmingly going to wealthier, older Australians that aren't even spending the value of them, and instead, they're being passed on to their kids."
Changing the super tax threshold
Ahead of the 2019 election, the Labor party outlined a range of policies aimed at saving money, including changes to super.
Under the current rules, people who earn less than $250,000 a year pay 15 per cent on their super earnings.
Labor proposed to reduce the annual income threshold from $250,000 to $200,000.
It did not take that policy to the 2022 election but with the Treasurer now encouraging debate on super, the idea is back in the spotlight.
Dr Fahy said the government needed to revisit the policy.
"With super doing more of the heavy lifting, it's important that the tax concessions associated with super are sustainable," he said.
PM says no big changes to super
On the election campaign trail last year, Prime Minister Anthony Albanese insisted changes would not occur under a Labor government.
"We've said we have no intention to make any super changes," he said in May.
Speaking on Wednesday, Mr Albanese said any changes made would not hurt the average Australian.
"There is nothing that impacts the sustainability of the system from punters out there who have got $150,000 in their accounts, that is not an issue at all," he said.
He insisted that the changes wouldn't be major, but didn't specify when the changes would be announced or introduced.
"We said during the election campaign that we did not intend to make big changes to superannuation and we don't."
Opposition Leader Peter Dutton said it would be unfair on older Australians to change the rules.
"If you have worked hard and you've put your own money aside into superannuation, you don't want the government changing the rules and taxing it effectively retrospectively," Mr Dutton said.
"The changes that they are proposing to superannuation, I think, are going to be detrimental to people's retirement plans and I think self funded retirees and pensioners and those looking forward to retirement in 10 or 20 years will see great uncertainty."
