Australian retirees face pension and superannuation tax challenges

New research and industry analysis have highlighted financial challenges facing Australian retirees regarding the Age Pension and superannuation taxation.

Modelling commissioned by HESTA and conducted by SuperEd suggests that current Age Pension rules may penalize older workers for increasing their employment income. The study found that a pensioner earning $65,000 could take home $319 less annually than someone earning $60,000 due to the combined impact of income tax and the loss of Age Pension payments. In some scenarios, increasing employment income by $5,000 resulted in an effective marginal tax rate exceeding 100 per cent as pension entitlements were withdrawn.

Separately, the Financial Services Council has identified a potential $55 million annual tax burden affecting $372 billion in superannuation assets. While the Federal Government previously indicated that capital gains tax changes would exclude superannuation funds, the analysis suggests that assets held in managed investment trusts may still face additional tax liabilities. The Financial Services Council is calling for government amendments to address these potential impacts on retirement savings.