Labor doesn't intend to cap super in October budget, Jones says

Financial Services Minister Stephen Jones has confirmed that Labor has no plans to introduce a super balance cap in its upcoming October budget.

Speaking to Sky News on Wednesday, Mr Jones said that while the issue of high-balance superannuation funds has “been kicking around for a while”, “we have no plans for this budget to be dealing with that issue”.

“We’ll look at submissions that have been put by ASFA and others, the SMSF Association had something to say about this about 12 months ago now as well. So, you know, the issue is being raised by unusual quarters — people who are not normally on that side of the debate,” Mr Jones acknowledged.

The Minister, however, reiterated that this budget is going to focus exclusively on implementing Labor's election commitments.

“We want to work through all of these issues in an orderly fashion,” Mr Jones said.

He confirmed that Labor is looking closely at all of the issues in superannuation.

“If you’ve got massive retirement balances in a superannuation fund, it’s pretty hard to argue that that’s for retirement income,” the Minister said.

“It might be, you know, cleverly managing your superannuation affairs. But it would be hard to argue that it’s for retirement income. So, I think let’s get a proper order.”

Treasurer Jim Chalmers previously announced that he intends to legislate a new super objective, and, according to Mr Jones, “that’s the conversation that has to come first before we start looking at some of these other issues”.

Australian Institute of Superannuation Trustees (AIST) has been the latest to pressure the government to introduce a $5 million limit on total superannuation balances.

Much like its peers, the group wants the Labor government to require individuals that exceed that $5 million cap — of whom there are 11,000 according to the Retirement Income Review — to be asked to withdraw the excess amount by 1 July 2024.

The Morrison government’s retirement income review also found that people with a super balance of $5 million could achieve annual earning tax concessions of around $70,000.

In its submission to government, AIST cited analysis by Mercer that found the tax concessions enjoyed by a single $10 million self-managed super fund could fund 3.1 full age pensions.

Back in February, Mercer, too, demanded that super be capped at $5 million, citing inequality in Australia’s super system as a key motivator.