‘Kind of logical’: AustralianSuper boss Paul Schroder backs raid on $3m nest egg

The boss of Australia’s biggest superannuation fund has backed Federal Treasurer Jim Chalmers’ tax grab on nest eggs above $3 million, saying instead the focus should be on giving low-income earners more taxpayer-funded support.

AustralianSuper chief executive Paul Schroder on Wednesday said it was “kind of logical that very high income earners and very large account balances could be taxed differently” when asked about the extra 15 per cent tax on super balances over $3m.

“But if I was going to spend any time thinking about tax treatment, I’d be more focused, not so much on the high income earners, but on the lower income earners,” he told the National Press Club.

Mr Schroder believes workers caught under the low income superannuation tax offset should be compensated more. Under the current system, those earning $37,000 or less a year may be eligible to get up to $500 back into their super.

With more than 2.5 million Australians expected to retire within the next decade, Mr Schroder warned the nation’s world-leading $4.2 trillion superannuation industry urgently needed reform, including a simpler retirement savings system.

He noted less than half of Australians felt confident about retiring, while only one in two applied for the aged pension as soon as they were eligible.

“I’m calling for changes to the law so that Australians can easily move back and forth between work and retirement, between saving their money and spending it,” Mr Schroder said.

“Currently, the system requires members to open a separate retirement account if they want to draw down an income and another one if they want to keep contributing. Just how stupid is that?

“I think a streamlined system is a really obvious solution, one that helps Australians from their very first job all the way through to their final years, one that allows contributions and drawdowns to co-exist seamlessly, their money in and their money out.”

While the 1992 retirement system was “a piece of genius”, it needed updating for the modern world, Mr Schroder said.

“The way that we serve members today will not last the distance to the next century. We need to reset our approach to retirement, guidance and advice,” he said.

He also suggested governments could build assets, with the plan to sell or lease them later to long-term investors like super funds.

“I like to say: build to sell . . . that’s a model very much worth exploring.”

Mr Schroder said AustralianSuper — which manages $385 billion in funds on behalf of over 3.5 million members — had a potential $40b to deploy for investments in Australia over the next five years.

“If you’re a company with a good idea, if you’re a government with a big plan — our door is open,” he said.

“We’re ready to invest but only when it benefits members — and where risk-adjusted returns warrant the investment.

“So superannuation has a role in national renewal . . . but not every project will stack up for members. “

Mr Schroder further warned Australia’s retirement savings pool was not a political “piggybank”.

“Super is not a trillion-dollar fix-all. It cannot — and it should not — be used to solve every complex national problem,” he said.