The rubbery numbers behind super tax concessions

Bravo Tony! Yet another valid argument as to the shallowness and idealogy based nature of the "Concessions" argument.

Treasury should be embarrassed by the triteness of their policy work in this instance. it does their reputation, built up over generations, a great deal of harm. And for that, Australia is the loser.

Interesting article in todays The Australian (1 July): "Paul Keating casts a giant pall over Labor’s unrealised super gains tax"

A new super tax proposal has been unveiled, which would raise $1bn more than Labor’s policy without taxing unrealised gains and which has garnered support from economists.

"The plan – from former Westpac official Kerry Gore – would be a flat 20 per cent tax on all super earnings, with a 5 per cent rebate for people with less than $3m in their accounts, similar to former Treasury boss Ken Henry’s recommendation in his tax review, which was overlooked by the previous ALP government and Treasury. The alternative proposal would also make calculations simpler for superannuation funds and prevent unrealised capital gains from being taxed, appealing to industry super funds."

"Economists such as Stephen Anthony, who was appointed by Labor to chair a review into the NDIS, said the Treasurer and the Prime Minister would look like a “laughing stock” for not considering a policy that excluded unrealised gains. He Mr Gore’s was “a sensible compromise”.

“But this is the problem with Labor now … that they don’t consider compromise,” Mr Anthony said. “It’s unbelievable that some of these things aren’t considered I’m not surprised. People like (former ACTU secretary) Bill Kelty said no to unrealised gains tax, Paul Keating is against it but (Labor) won’t listen. It will cost them. It’s the fundamental principle of it that's wrong. It’s probably fourth or fifth rate policy.”

James, I have read the article referred to and the comments about the Gore proposal . It does not appeal to me as it creates problems for all super members while trying to resolve a problem involving a relative few. It involves super funds remitting 20% tax on earnings to the ATO and then the ATO sending 5% back. How inefficient is that ? It assumes a lot of things, Firstly that the ATO'S records will be accurate to work out the rebate. Secondly that the refund will be done in a timely manner and lastly that the ATO will have the resources to do all this in a timely and efficient way. It also assumes that the Industry Funds can calculate the individual tax and earnings to remit the 20% to the ATO. I thought that was the problem in the first place . We know it will be a giant stuff up. So we are supposed to go along with a proposal that takes an extra 5 % out of our earnings to give to the Government to give it back to us at some time in the future. Who gives us back the loss of earnings on that 5%? A great proposal for the Government. That explains the extra $ 1 Billion in revenue for them. Against that will be the stampede into allocated pensions for people with under $2 million and money currently in an accumulation account ( and the loss of revenue which follows). So the Government will then have to tax allocated pensions at 15%. Or should that be 20% ?

The Gore proposal is impossible to implement with current fund reporting. Funds do not report on a "tax paid per member basis" enabling calculation of a rebate to individual members.

Paul Keating is quoted as saying that as compulsory super is increasing to 12%, the system is finally mature and the impact will be that the cost of the age pension to the taxpayer will decrease to 2% of GDP. This compares with 14% of GDP in France and 10% in Germany.

So the more honest assessment of super tax concessions would be to question if the cost of super’s tax concessions presently amount to 10% of GDP, which is what a comparable cost of the age pension would be without super. The answer is obviously no, because the taxpayer pays all of the age pension in retirement whereas with super, people contribute significantly to their own retirement income. And that folks, is why we have compulsory super.

There is always a lot of concern about “excessive” tax concessions flowing to high income earners. David Know put that concern to rest here:
https://www.firstlinks.com.au/is-it-fair-that-the-wealthier-get-the-most-super-benefits

In particular he said: “In fact, when you consider the full picture of retirement income and allow for realistic assumptions, the level of Government support over a lifetime (super and pensions) is remarkably level across different incomes.”

It is well known that Keating had to drag Treasury kicking and screaming into introducing superannuation. Their dislike of it is part of their DNA. So having a big whinge about concessions is par for the course. No mention by them of the lost opportunity cost to super members for not seeing their money for 40 years. Treasury has been proved wrong once again. The super savings here are the envy of the world but are at constant risk from Treasury and politicians. We put away any chance of getting meaningful access to our money by getting concessions to do so. That was the bargain. But Treasury and the politicians are always wanting things their way and so break their bargain any chance they get. Why would anyone put their money into super in the future ? Better to put it into the family home and upgrade from time to time

When you come down to it the so called "superannuation concessions" are nothing more than treasury and the politicians keeping their side of the bargain.

Sounds to me like an argument from the rich for why they should continue to get huge tax handouts from the government via the tax concessions on super contributions and earnings. The cost to Australian citizens of the preferred tax treatment IS in excess of $50B a year. The author seems to want to argue that their value to individuals is somewhat less due to them having to give up liquidity. My response to this is so what? A number of readers make the point that most of these benefits are attributable to discretionary contributions so those making them must believe that the tax concessions are much greater than those required to get them to make these savings. Indeed, a good case can be made that most of the contributions are funds that they would have saved anyway and that they end up as part of their estate. Hence they were never needed to fund consumption and so there is no need for an illiquidity discount. Finally, about one-third of the population get no tax concessions at all because their marginal tax rate is less than 15%. These are the people who face real liquidity problems due to having to make mandatory contributions. The author is strangely silent on this issue. The illiquidity argument goes no where in justifying the tax concessions associated with super which imposes great costs on the population.

"cost to Australian citizens of the preferred tax treatment IS in excess of $50B a year":

'The total size of the Australian superannuation (super) system is $4.2 trillion as of December 2024, according to APRA.'
$50 G / 4.2 T = 1.2%

Two smaller tax alternatives to super:
. Stuff money into a Palazzo for tax free capital gains,
. Emigrate with capital to lower tax jurisdiction.
Super concessions, for those who are likely to bequeath substantial capital, keeps capital domicile in Australia and invested in Australia generating business and employment and taxes or repatriating earnings to Australia. Better than foreign capital.
Economic fertiliser.

"give up liquidity":
Illiquid money costs more, must return more or be taxed less.

"never needed to fund consumption":
Resulting in increased capital, making a larger, more sumptuous pie.

"one-third of the population get no tax concessions at all because their marginal tax rate is less than 15%:
Super co-contribution. Tax free threshold is a nice tax concession. No need to bother with super, just save and invest.

"having to make mandatory contributions":
First home super saver scheme.

"cost to Australian citizens of the preferred tax treatment is in excess of $50B a year":

'The total size of the Australian superannuation (super) system is $4.2 trillion as of December 2024, according to APRA.$50 B / 4.2 T = 1.2%”

According to the ABS the annual inflation rate in Australia, as measured by the monthly CPI indicator, was 2.1% in the 12 months to May 2025 meaning that the cost to superannuation members in LOST PURCHASING POWER was: (2.1 x $4.2T)/100=$88.2B over the same period.

Now bearing in mind that the "$50B a year" is not actually a hand-out by taxpayers but a reduced hand-in by members, the amount withheld still doesn’t compensate for the loss in purchasing power.

Hi Ron, my response to you would be similar to the one I gave RichardL. That is, personal discount rates for illiquidity would vary depending on the individual’s situation. Those who contribute voluntarily would likely have a discount rate at, or close to zero. But they do not form the backbone of the super system which is overwhelming dominated by millions of workers who contribute to super compulsorily. In aggregate, lack of liquidity costs are real, and the $50b concessions figure is gross of those.

As for those on the lowest marginal tax rate, I think Dudley has more than adequately qualified that position above. In any case, in my analysis I did state that liquidity adjusted super tax rates required for those on a 30% marginal rate, was less than the current 15%. I also said there were no adjusted concessions for them. So logically that would imply no concessions for those on the lowest marginal rate also.

It got me thinking though, what would be the liquidity adjusted tax rate under the 30-year scenario for a 16% marginal tax rate. It turns out to be -3.9%. A negative rate which backs up what you and I are both saying, and would have been a good point to make in the article.

interesting but rather technical discussion. I am one of the 80,000 or so who will be subject to the additional tax should it eventuate. I think this will be 4th time is recent years that the rules have been changed each time to my disadvantage. That aside, the reason I ended up with a so called large/excessive balance in Super is not because of estate planning but was because I found that, in seeking out the easiest hassle free way to invest my funds, was via an Industry Fund which I was already a member of. The choice of investments was easy and simple (International, Australian, Fixed Interest, Growth etc) and the returns were reasonable and the record keeping and tax returns were all taken care of. I am not aware of any similar format for investing that is that simple and easy. Perhaps the Superfunds should look at setting up a fund(s) for non-super investment that parallels their existing investment options. They might be able to run a profitable side business.

Good read. Um.... me thinks if you have $3mil+ in super then life ain't too hard on you looking- as that your opportunities have the priviledge of choice. Anything else a bit of technical overeach otherwise as 'winging'.
Smile you are a millionaire. :)

Well I was winging it for 40 yrs plus.Understand compounding ,work out how to multiply a number by 2 and get the answer correct.Never stopped smiling and laughing.
Auto correct? Perhaps the words you were looking for were WHingeing greedy bastards. Everybody else should pay tax,but not me :-)

Wow, so much confusion and stupidity over such a simple proposition regarding super! And so much misunderstanding by both the experts and Treasury! One thing is certain though and that is super is/was the most heavily regulated investment under the sun! Maximum contributions in, regulated as to where to invest and with whom. Every dollar invested in super has been done so legitimately, so bugger off those who suggest that super is an "estate planning" tool! If you can predict when you are going to die, good luck to you if you have some capital left in super. That's why there is such a thing as a "reversionary pension and a "binding death benefit nomination". A lot of the above comments are clearly influenced by the politics of envy - that's all!

"bugger off those who suggest that super is an "estate planning" tool!":

Super was and is intended to be an "estate planning" tool else government would confiscate super on death.
They want to pare a bit more off.

Superannuation tax breaks are designed to encourage you to save so you do not need to rely on the age pension. "For a comfortable retirement" is often referenced. It is not so your kids can get a head start in life with taxpayer subsidised savings. The tax change is not a new tax on super (on balances over 3m per person) but merely a limiting of the generous tax breaks that currently apply. For those with over 3mil (many with well over) some of whom are crying poor due to the illiquidity of their funds, there should actually be a moment of reflexion appreciating how good they have had it for so long. Super or otherwise, assets in this country are undertaxed while income is overtaxed.

"It is not so your kids can get a head start in life with taxpayer subsidised savings."

How is it 'taxpayer subsidised savings'? People who have that much money in their super wouldn't have access to age pension (and have to forego the access to the assets/investments until they reach a certain age), while people who rely on age pension literally rely on subsidised pension funded by the government through tax collection.

"Super or otherwise, assets in this country are undertaxed while income is overtaxed."

Be careful what you wish for. If Labor manages to push this Div 296, don't be surprised if they are trying to impose CGT on your primary residence (whether the gain is realised or unrealised). You want to know what's 'undertaxed' in this country? It's consumption - our over-reliance on income tax and under-reliance on GST for tax collection is very obvious compared to other developed countries.

“"For a comfortable retirement" is often referenced. It is not so your kids can get a head start in life with taxpayer subsidised savings.”

Super is a system to force individuals to save and invest for retirement, so the government doesn’t run out of money paying aged care pensions.

Any investment system for retirement has the potential for leaving a legacy to a spouse or family of philanthropy.

The “classic” study on how much retirement capital you need was from William Bengen. He figured that to survive most market scenarios and for your money to last you and cover your living costs till you die, you need to accumulate enough money to live off it at a drawdown rate of 4%. In other words you need (your retirent budget) / 0.04 or in other words 25 times your retirement budget. If you want to retire on $100k/year, you need retirement capital of $2.5M.

But that’s not the main point. Bengen also looked at the ideal portfolio allocation between shares and bonds in retirement. He found a sweet spot at near 80/20 … 80% shares, 20% bonds. That’s an “aggressive” portfolio … in retirement. At that allocation your chances of your money lasting you for 30 years was very good … but also you have a high chance of leaving money to be passed down as an inheritance.

In other words, the government can’t really micromanage how much estate you have left. It’s in the nature of investing that if you make your investment last for 30 years (saving them aged care pension payments), you also build and leave an estate.

"the government can’t really micromanage how much estate you have left":

They could with a UK style 'State Pension' or USA style 'Social Security' where government owns the pension capital and confiscates it on death of the pensioner.

Aust government had to devise Super to make it more attractive than the traditional Age Pension and came up with pension capital owned by the pensioner, not the government.

"couple earning $60k outside super pay no tax":

. Annual salary: $0
. Spouse (married or de-facto), Spouse's annual income: $31,002
. Senior & pensioner offset (SAPTO)
. Deductions & Other Income, Dividends & Other income: $31,002
https://paycalculator.com.au/
.Tax: $0.00

If only it were a level playing field as some judges and pollies are not having applied to their super, why would they bother blocking it.

@Franco: "Firstly George , non concessional contributions are very often after a CG event where the max tax rate is less than 25% of the gain"

Rubbish! I, like many others no doubt, have made NCC (under the rules and actually encouraged by government!) after having paid a 47% marginal tax rate on those dollars contributed! Not from some CG windfall! What percentage of these NCC's are from CG windfalls Franco? Easy to make groundless assertions in support of your gripe!

You may be one of a few . Maybe get better educated on how to avoid paying 47% tax just so you can put it in non concessional super.

"You may be one of a few . Maybe get better educated on how to avoid paying 47% tax just so you can put it in non concessional super.":

Educate us.

. Division 293 tax payable. if income including concessional contributions exceed $250,000 in 2024/25.
. Income tax 45% on taxable income greater than $190,000 + Medicare levy of 2%.

@Franco. "Maybe get better educated on how to avoid paying 47% tax just so you can put it in non concessional super."
Profoundly supercilious comment! I'm educated enough thanks, and not a tax avoider. Guilty of having being a PAYG salary earner, with few opportunities to legally minimise tax. I've certainly paid my fair share when I was a high income earner. That's the progressive tax system. I chose to forgo some present consumption and top up my superannuation (lost a lot in the divorce robbery) to have a better future in retirement and not be a burden to the tax payer (including my children and grandchildren), drawing the age pension. And no I don't have close to or over $3M. The NCC contributions put in were legal and encouraged by a government which now yet again, seems inclined to change the rules. Such is life. However, taxing super unrealised capital gains, that may never actually be real, is another whole shade of despicable, underhand, bad, lazy policy. Everyone should be concerned as to where this precedent may lead!

What everyone is missing is that s elf funded retirees also do not receive a pension and numerous other benefits linked to the pension.
How much effective taxation equivalent is that?

"8% growth on $6mill( 480K)- 5% drawdown(300K) -3% inflation(180K) so the couple still have about $6 mill":

Or 16% growth, or 4%.

Still lose capital to inflation 'stealth tax' on super capital.

Couple can withdraw whatever from super to personal accounts, no tax, no change in capital.

Still lose same amount of capital to inflation 'stealth tax' on total of super and personal capital.

Couple can spend whatever from personal accounts, $0.01 to 2 * $3,000,000, reducing capital.

Still lose capital at same proportional rate to inflation 'stealth tax' on remaining super and personal capital.

No inflation 'stealth tax' concession.

Dudley, you are indeed correct about the insidious 'stealth tax'. However getting government or Treasury, for that matter to acknowledge it, and factor it into their calculations/considerations isn't going to happen. Even more revenue would disappear if they did! With little appetite for spending restraint, fat chance of real productivity improvement (over regulation, unions & Labor industrial relations policies) and even less chance growing the economic pie (losing remaining industry to high energy costs & a shallow economy), only more needed revenue through higher taxes seems to be on the horizon.

You need make investments that your total capital return derives from cash distribution instead of unrealized capital gains. It is an illusion that you can retire on a portfolio that mainly consists of equities investments in financial markets, your income from dividends will be so volatile that you will need sell your assets to fund your retirement expenditures, equities holders have no rights to enforce dividend stability.

Frog Poop, Dividends are typically more stable than company share prices, even more so during market down turns and corrections

If you ask me many of these very large balances will not have death tax implications as they were put into super under old rules as undeducted contributions tax free, continue to enjoy tax free growth in pension accounts and will go to estate beneficiaries tax free. These super large accounts are Estate Planning vehicles and should definite be paying some form of taxation on earnings and ongoing growth. These super large owners of these huge amounts of capital can certainly afford it.

“very large balances …were put into super ..as undeducted contributions tax free”

As noted elsewhere in the comments undeducted or concessional contributions are not taxed going in because they have already been taxed as income, meaning (for higher income earners) that about $1 income tax was paid for every $1 contributed.

“continue to enjoy tax free growth in pension accounts” and “should definite(ly) be paying some form of taxation on earnings and ongoing growth”

Transfer balance caps introduced in 2017 mean that only $1.6-2.0m (depending on timing and subject to annual draw-down rules) can be held in a tax free pension account while the remainder has to be transferred to an accumulation account which is currently taxed at 15% and may soon be taxed at 30% on amounts over $3m.

Apart from mandatory SG, no one is forced to put anything into super. So isn't it up to each individual, not the government, to estimate their required illiquidity premium? As you have stated this number would be different for each person. And clearly a lot of people are very happy to shove their money into the current system with 15% tax rate.
Frankly regarding SG, the economic benefits of such a system have outweighed detriment to any individual. Savings that the government makes on age pension being the most obvious one, but also the stability of our financial markets and investment into productive assets. Should the government also calculate a premium on how each individual benefits by living in a (relatively) thriving economy?

The taxes on superannuation should not be seen as receiving a concession. Rather they should be seen as a bonus. If it wasn't for superannuation the majority of this money would not be invested in taxable assets. More likely spent on housing, holidays, new cars etc.

"Rather they should be seen as a bonus.":

Economic fertiliser.

Another in a long list of disingenuous articles on this and related topics, Tony! Not just from you, I hasten to add.

The wealthiest have their huge tax concessions because they have dialled UP the amount that they have put into super. They are so upset with the money being locked up and overtaxed that they fight to put in as much as possible! So, I suggest that your utility value is just plain wrong.

Furthermore, the point here is that the system is there for everyone because that's the simplest way to operate it, but it was never actually necessary to compensate the wealthy AT ALL for saving for retirement. So, any and all such compensation is a system cost that should be minimised.

Not that I expect much agreement here!

Hi Richard, I did say: “Note that this analysis is based on a specific discount rate curve for illiquidity, the rate and shape of which can vary depending on individual circumstances”.

And for the very wealthy, I agree, they want to lock their money up, and their personal discount rate would be zero, perhaps even negative, because their motives for super are not on a par with the general population. They are not using super to provide for retirement, they are using at as a tax-preferred haven for estate planning. And the Div 296 tax will deal with that, which is a good thing.

But those very large super funds are very much in the minority, and this article is not pitched at extreme scenarios. It’s all about pointing out that the TEIS benchmark is inappropriate in arriving at the $50 odd billion in concessions, given the unique access restrictions and compulsory nature of super. It is an inappropriate benchmark for average PAYG workers who are forced into locking their money away for up to decades when they have large mortgages and young families to support. Even those who voluntarily contribute to super to top up their retirement savings go into the system in good faith, but know they are tying their money up at a cost for the greater good, and they are prepared to forgo immediate consumption to achieve that.

That there is a liquidity cost for the vast majority of individuals is without doubt. And clearly, tax concessions assigned to them under the TEIS basis are overstated.

Another in the long list of uneducated and ill-informed responses to articles, and not just from RichardL I hasten to add.

If the wealthy have "dialled up" the amount they have put into super, it is because it's money they have already paid tax on....Non-Concessional (AFTER TAX) Contributions.

You may want to take a look at one of your annual superannuation statements, RichardL. There's only one person who has been helping themselves to your super account up until the point of retirement. That's the tax man. The ATO have had no problem granting themselves early access to your super. They understand fully the "time value of money" which is after all the basic premise of Tony's article.

This article gives little insight as to whether the $50b is in fact correct. The way I see it is that super has become a very effective tax minimisation strategy for too many people and that the rate of tax paid in this concessional environment is too low for those with larger balances. One can argue what that limit should be, but somewhere between the pension limit (from 1 July $2m) and $3m seems reasonable given that $2m will generate a minimum pension of $100,000 tax-free at age 65, which is about what the average worker gets before tax! And you will also probably get the CHCC too.

Also, GeorgeB

1 Paying taxes does not "entitle" you to a pension, the age pension is not a contributory system like eg UK, and pensions in Australia have always been means tested (arguably pretty lightly here as a couple can have over $1m in assets, plus a house, and still get some pension).

2 Private health insurance does not mean that you are not getting some benefit from the taxes you pay - you at least get the health insurance rebate. Medicare contributions to medical expenses, both in and out of hospital and emergency treatment at public hospitals.

3. Many built up significant super balances from pre-tax super using salary sacrifice contributions especially those who were old enough to also take transition to retirement pensions (when they were untaxed).

“Paying taxes does not "entitle" you to a pension, the age pension is not a contributory system like eg UK”

In the past, Australian income taxes included a separate levy for funding the age pension, but this approach was eventually consolidated into general revenue. The aim was to create a separate pool of money to fund social services, including the age pension, child endowment, unemployment benefits, and sickness benefits.

The pool of money was funded by a specific levy on personal income tax (initially 1.5%) and employer contributions. Over time, the levy increased, reaching 7.5% in 1950, but it became less clear that this was funding a separate “pension account.”

Over time Governments increasingly treated the fund like general revenue, borrowing from it or using it to finance other expenditure. So despite the fund still existing nominally, earmarked pension contributions effectively lost their "ring-fenced" status.

The fund was formally abolished in 1985 by the Hawke Government. From then on, age pensions were fully funded from general revenue, and no separate levy existed. Any link between tax paid and pension entitlements was completed severed.

So well may you say that “Paying taxes does not "entitle" you to a pension”, but despite the link between tax paid and pension entitlements being completed severed for political expediency, the fact remains that pensions continue to be funded from general revenue and we all know who in the community does the heavily lifting on that.

"If government is going to motivate people to save for retirement, it must be prepared to offer meaningful incentives to individuals for giving up access to large sums of money for many years.":

Most have more immediate applications for cash; one being home ownership which brings more immediate benefits.

Saving for minimum equity or full equity have their own liquidity discount rates superimposed on the retirement liquidity discount rate.

Also ... doesn't the government effectively recoup some of the"concessions" from the acounts of those who die with funds still in super? I'm not sure if this tax collection is accounted for in the super tax concessions $50 billion annual figure.

Of course, Treasury omits the fact that Super savers don't cost the Government money in the form of pensions.

Is there not also an opportunity cost discount eg. money locked up in a SF could have also been used to reduce the loan amount of a mortgage or other loan which has a compounding affect as a mortgage offset account? Perhaps this is just part of the liquidity discount

Exactly! Exactly! Exactly! Has been my point always - the superannuation rate of 15% is NOT a concession. It is part of the carrot & stick approach adopted by Government when superannuation was introduced as a retirement savings vehicle. Great article Tony, thank you.

It is not just the liquidity lockup that is negative - in super you can’t borrow, you are restricted as to the type of assets you can invest in - administration is excessive (audits etc) and ultimately you are forced to withdraw it via the pension obligations

A really refreshing way of looking at the "cost" assertion for super concessions.

And, I support the proposition "if Treasury is going to introduce measures to help sway the debate, surely it has a duty to estimate those measures as accurately as possible". This proposition could usefully be applied to political claims in general.

It seems that the effect of the upfront contributions tax is being ignored. The effect of that is dramatic.

Very good point!!!

And there is already the Div 293 tax surcharge ( extra 15 %, total 30% ) for all contributions for higher income earners ( over $250k per annum )

Tony, thanks for this article. It is really refreshing to see this fundamental point argued out in some detail.

I get the impression that authors of these papers on the cost of tax concessions start from the premise that the government is entitled to 100% of an individual’s earnings. Anything they allow us to keep is then a tax concession.

"It quotes a total super tax concessions figure in the vicinity of $50 billion annually, a misleading figure that the proposed new super tax relies heavily upon for justification."

And that's exactly why Chalmers won't be remotely interested in considering such things as liquidity discounting (not that he'd understand it, as an economist he is not)! As the old adage goes: "never spoil a good story with the facts"

Even more crazy, a retired couple have $3million each in super at 5% and investments earning about $60000 a year outside super. They receive $360,000 per year tax free !! Is that enough for a comfortable retirement ?
oops ,sorry that doesnt fit in with the Firstlink Responders

"retired couple have $3million each in super at 5% and investments earning about $60000 a year outside super. They receive $360,000 per year tax free":

After the inflation 'stealth tax' they receive:
= ((1 + 5%) / (1 + 3%) - 1) * (2 * 3000000)
= $116,504.85
Less than two after tax average full-time wages:
= 2 * 79076
= $158,144

Point 1. Super is no longer tax free in retirement - anyone with more that the transfer balance cap ($1.6-2.0m depending on timing and subject to annual draw-down rules) must transfer the rest of their super balance to an accumulation account which is currently taxed at 15% and may soon be taxed at 30% on amounts over $3m.
Point.2. Significant tax was paid to get $6m into super – large balances are generally built up with large after tax contributions already taxed at up to 50% or more depending on timing plus concessional contributions taxed at 15-30% again depending on timing.
Point 3. The contributions were locked up for 40 years or more – to encourage contributions when they were not compulsory there was an explicit condition/promise that super would be entirely tax free in retirement, this being the carrot that was used to encourage contributions and delay consumption.
Point 4. The retired couple are unlikely to qualify for the aged pension or other handouts that their lifetime taxes paid for because they are fully self-funded. They are also likely to have private health insurance so will not benefit from the public health system that their lifetime taxes paid for.

Hi Dudley and George , i was expecting those sort of comments so lets assume growth in ivestments of 5 to 6 percent per annum. Dudley really ! they are left with $158,000 ! Only half of the $360,000. You are good with YOUR calculations.
And your average full time wages before tax are $102000 but the median is $88000 .
So with growth factored in and extra taxes (yes George a lttle extra for having over $2million and the going over $3million ) they may only clear aroud $300000+per year. How will they survive.
Yes they paid more tax in their lifetime but much less if it wasnt in superannuation. Non concessional not taxed going in and if it was taxed at 50% why put into super in the first place,
As they say about vested interests and complaining wealthy boomers.

"left with $158,000 ! Only half of the $360,000":
They can reinvest $202,000 to make good that capital loss due to inflation 'stealth tax'.
A worker whose wage increases with inflation does not have capital loss due to inflation.

"Non concessional not taxed going in"

Non concessional contributions are not taxed going in because they have already been taxed as income, meaning (for higher income earners) that about $1 income tax was paid for every $1 contributed.

"if it was taxed at 50% why put into super in the first place"

Because this is the reality of being a high income earner, ie.you pay $1 tax for every $1 you want to spend or save, so its not just on savings going into super but on savings outside super and on all consumption. Of course there was also the promise that if you waited another 30 or 40 years your super would be tax free in retirement.

The reward for those lifelong taxes is that you get to be a fully funded retiree meaning that you are locked out of all govt handouts that the lifelong taxes paid for.

Firstly George , non concessional contibutions are very often after a CG event where the max tax rate is less than 25% of the gain. You seen stuck on how much tax you have paid and not getting it back. Paying no tax on Super after turning 60 and paying 15% in super does not seem that bad. Considering the tax on $250000 is in total 33% and thats if you dont negative gear into investments so that you can then pay max 25% of CG.
Dudley you are obsessed with inflation as a tax but continue to ignore the growth of Super which i believe has been averaging about 8% over a long period. That should cover your inflation of average 2.4%. Im also intrigued by your maths, couldnt you have gone
8% growth on $6mill( 480K)- 5% drawdown(300K) -3% inflation(180K) so the couple still have about $6 mill
Yes the $6mill is not worth as much due to inflation but they have at least $240K +to live on.
( possibly some other tax, lets say $60K so they are left with $240K + $60K outside super= $300K)

“non-concessional contributions are very often after a CG event where the max tax rate is less than 25% of the gain”
Non concessional contributions are after tax contributions and the tax paid depends on the source of the funds. If the source of funds are entirely from personal income taxed at the highest marginal rates then about $1 income tax is paid for every $1 contributed (in our SMSF more than 2/3 of the contributions were after tax).

“Paying no tax on Super after turning 60 and paying 15% in super does not seem that bad.”
After 2017 paying no tax on Super after turning 60 or retiring will only apply if your super balance remains below the relevant TBC , beyond that you will pay 15% and will likely pay an additional 15% on any balance above $3m.

“You seem stuck on how much tax you have paid and not getting it back.”
I have long ago stopped worrying about only getting to keep half of my hard earned and not getting anything in return. However it’s a matter of contention whether the changes to super that occurred in 2017 and the further changes that are now being considered are reasonable in the context in which the contributions were made.

Franco, can you explain how you believe a couple earning $60k outside super pay no tax.

Franco, not sure if you understand the super and tax rules. I assume you do know about the TBC, and the contributions tax already paid on a lot of super saving. Also, using an extreme example to pursue an argument makes for a weak argument. What is your actual point, without the extreme examples? Are you against Australians having a comfortable retirement? Are you against tax-free super? The majority of average income retirees don’t pay tax inside or outside of super. Is this really an envy argument about those who have saved for retirement?