First, they were hated as property owners because they could afford a house in the 1980s, which stirred up resentment among younger generations.
And as Australian baby boomers enter retirement, their finances are coming under further scrutiny – simply for having superannuation savings that earn them money to fund their twilight years.
During the accumulation phase of super, workers pay a 15 per cent tax on earnings. But after someone turns 60 and stops working, their super earnings are tax-free for retirement savings of up to $1.9million.
The reason for this is simple: older Australians are left with more money to pay their living expenses after their working lives have ended, and so are less reliant on the Age Pension.
But the Actuaries Institute – the peak body for mathematicians who calculate risk – wants to change that with a new 10 per cent tax on the retirement phase of super.
Under this proposed superannuation tax, workers would also pay a 10 per cent tax during the accumulation phase of super instead of an existing 15 per cent rate. So the idea is a flat, 10 per cent tax applied to both life stages of superannuation.
The biggest losers under such a proposal would be boomers with the most retirement savings who live off their super and don’t draw the age pension.
Professor Robert Breunig, the director of the Australian National University’s Tax and Transfer Policy Institute, tells me: ‘It would be a hit on those people relative to the current system.
Australian baby boomers who worked hard all their lives are now facing a proposed new superannuation tax (pictured is a stock image)
‘Those people are going to have a little bit less money to spend – but 10 per cent is still pretty small.’
Prof Breunig argues the existing system is, in fact, too generous for those who retire with lots of super.
‘The question is: is the current system overly generous? For people who have lots of money in super, there’s a big benefit – I’m not sure if there’s much benefit to Australian society,’ he says.
Australia’s youngest boomers turned 60 this year and the Actuaries Institute admits their proposal to tax super earnings at the retirement stage would affect this group the most – especially if they have more super.
‘A current 60-year-old couple who is closer to the retirement phase, and therefore has a lower offset from the lower tax in accumulation phase, would be more adversely impacted than younger households,’ it says.
‘The largest impacts would be felt by members currently in the retirement phase because the change will simply be an additional tax on earnings, given they are no longer in the accumulation phase.
‘The higher wealth households would be more impacted proportionately, compared to the lower wealth households.’
The Superannuation Tax Reform: Sensible Changes for a Fairer System discussion paper argues a flat-tax super plan would see younger Australians have more retirement savings by 60 – the age when someone can access their super.
The Actuaries Institute wants to introduce a 10 per cent tax on the retirement phase of super
‘Retirees would pay higher taxes, but those not yet retired would enter retirement with higher balances from which to fund this extra tax,’ it says.
The paper also argues one tax rate for super, during the accumulation and retirement phases, would mean Australians would only need to have one superannuation account without having to switch at retirement – benefitting both individuals and super funds.
‘Implementing a uniform tax rate across accumulation and retirement would also mean that all members could have a single account,’ it says.
‘Retirees would not need to juggle two accounts with different rules and the significant complexities (and costs) of transfer balance caps would be removed.
‘It would no longer be necessary to separate contributions into different types within fund accounts and to track them over time. This would improve the simplicity of the system and fund operating processes.’
The Actuaries Institute is advocating a flat tax on super 15 years after the former Treasury secretary recommended this idea in a wide-ranging tax review.
Professor Robert Breunig, the director of the Australian National University’s Tax and Transfer Policy Institute, tells me the proposal will hit those with the most retirement savings
Under their plan, new retirees would be paying tax on their super for the first time – but government revenue would not improve for another 17 years.
‘Less tax would be generated initially, but there would be more tax than the current regime from 2042 onwards,’ the report says.
Compulsory super debuted in 1992 when older baby boomers were in their mid-forties.
Back then, mandatory employer contributions were at just three per cent.
This meant many of the boomer generation didn’t have generous retirement savings if they only started building their super 14 years before turning 60.
Those who worked in unstable jobs in the private sector often had little retirement savings.
Many had to continue working until they could get the age pension at 65. It has since been raised to 67 for those born from 1957 onwards.
Younger workers, by contrast, have benefited from double-digit compulsory super contributions.
It’s been at 11.5 per cent since July 1 and is growing to 12 per cent in July 2025.
But Prof Breunig says the 9.5 per cent compulsory superannuation guarantee, that applied until June 2021, was a more appropriate level.
He argues that would see young workers keep more of their earnings now which could be used to buy a house.
‘There are kind of some deeper problems with the super system,’ he says.
‘Is the superannuation guarantee too big? Are we making people save too much money, particularly when you look at the fact people who are 30 would like to be using this money to buy houses.’
Australians have on average just $164,126 in superannuation, based on tax office data.
By their earlier sixties, men typically have $205,385 in super compared with $153,685 for women in the same age group.
This is well short of the $595,000 target the Association of Superannuation Funds of Australia recommends for a comfortable retirement provided someone has paid off a mortgage.
The Actuaries Institute proposal may well help younger Australians save up for their retirement and close this savings gap.
Poorer Australian retirees with less in their nest egg, as a result of the new super tax, would end up relying more on the age pension.
Then there are those who accumulate too much superannuation – dying with big retirement savings balances.
‘We’re seeing a lot of people who pass away with a lot of superannuation and we’re seeing a lot of people who don’t spend down on their superannuation,’ Prof Breunig says.
‘So, there are a bunch of people who at 85 have as much super as they did at 65.’
Prof Breunig says a 15 per cent tax on both the accumulation and retirement phases of super therefore makes more sense.
‘There’s merit in that idea – I’m not sure 10 per cent is high enough,’ he tells me.
‘I think 15 per cent is not unreasonable.’