This column by Ross Gittins, the Economics Editor of the Sydney Morning Herald, gives us the figures.

http://www.smh.com.au/opinion/politics/fat-cats-that-got-cream-in-super-tax-deal-are-breaking-the-bank-20120814-246sp.html

Note the part where he says that the top 5% of income earners (that is, the people who would save anyway because they want a better standard of living in retirement than can be afforded on the pension) are getting 37% of the benefit from superannuation tax concessions. The total cost of the concessions is close to what it would cost to just give everyone the full pension when they reach the appropriate age, no questions asked.

A better alternative would be to tax super based on how much an individual has accumulated in his/her superannuation account(s). There could be several bands, with taxes gradually increasing from zero towards the person's marginal rate as the total balance rises. You would be able to put in as much money as you like, although it might push you into a higher tax band.

If we are going to make people take the money as a pension/annuity, then there need to be hardship provisions whereby people can get access to more than is being drip fed if they can make a good case for it. Also, if the compulsory contribution is being raised to 12%, why not use the additional 3% for longevity insurance? This would give people an annuity, but only after they turn 85 or some such age.

Good points, Divergence. But don't you think that such a tax scale will then be a disincentive to continue with Superannuation. Admittedly, if the tax scale starts rising to an average amount for those earning more than $300K per annum and/or achieving a Superannuation Balance in the top 5%, then it may even the playing field somewhat. However, there are many middle class workers now earning between $80K to $150K with massive mortgages. I think there are too many questions and much ambiguity about Superannuation.

Katie,

As I see it, your income wouldn't matter, only how big your super balance is. Being on a high income now is no guarantee that you will still be on a high income in the future. Think of professional athletes. Once a high income earner has a big enough balance to be disqualified from receiving the pension, why should we care if he or she chooses to invest in other ways, rather than making a voluntary contribution to super?