Tax breaks heavily skewed to super rich

The tax breaks in super are skewed heavily to the rich, who don't need them.

The case of former BHP Billiton chairman Don Argus, which we also referred to, re-enforces that point.

A super fund with a balance of $15m could easily be paying a pension of around $1 million a year, and it's all tax free.

Even if full tax was paid on that pension, the recipient would still be left with around half a million dollars to struggle by on.

A look through the remuneration reports of Australia's listed companies provides interesting reading on super.

For example, Australia's biggest company, the Commonwealth Bank.

Chief executive Ian Narev last year took home $8 million, which included a $25,000 pre-tax contribution to superannuation.

You would expect that he would have also made the maximum after tax contribution to super of $180,000.

He would be silly not to as it's the best investment in town.

Which means that, when he retires, Mr Narev will also have a super fund with many millions of dollars in it, which is likely to pay him a seven figure pension.

But given his enormous wealth, Mr Narev would probably be among the first to admit that he doesn't need his superannuation or the huge tax breaks that come with it, he's likely to have plenty of savings outside super.

According to the Federal Treasury, those superannuation tax breaks cost the Government $30 billion last year.

The Grattan Institute has estimated that more than half that foregone revenue goes to the top 20 per cent of income earners.

That's more than $15 billion last year.

In its detailed study of the super system, the Grattan Institute also concluded that at the age of 55 the top 20 per cent of income earners have accrued nearly $2 million in their superannuation funds.