The government is currently legislating to reduce the tax concessions available on superannuation balances of more than $3m. While this measure would affect only around 80,000 people out of the 17m holders of superannuation conservatives and lobbyists of the wealthiest are arguing this will hurt those who have saved for their own retirement.

In reality, the use of superannuation tax concessions has been completely abused. The purpose of superannuation is to reduce the burden on the pension system, but now we see in articles such as in the Financial Review today, people arguing that they are using superannuation to build up their inheritance for their children and grandchildren and that these measures to reduce tax concessions on super balances of over $3m are “stealing my children’s inheritance”.

Superannuation tax concessions for the wealthiest only serve to entrench inequality in our society, but worse, because the concessions allow the wealthy to reduce the tax they pay on their income before retirement, it means Australian taxpayers are in effect funding the retirement of the very wealthiest in the country.

The cost of these taxation concessions puts lie to the line that they are “self-funded” retirees.

In the most recent financial year, the Treasury Department estimated the concessions of superannuation earnings and contributions cost the government $51.7bn in foregone revenue. This compares to the cost of the Age Pension of $58.9bn

But whereas the benefits of the Age Pension are designed to improve equity, the tax concessions on superannuation are greatly geared towards the richest in society. In 2023-24, $17.7bn, or 34% of the total value of the tax concessions went to the richest 10%. The poorest 70% of Australians received only 32% of all the benefits of these tax concessions.

There is no public good from tax concessions which only go towards inheritance. It is not the role of government to reduce taxation for the richest so they can pass on wealth to their children – especially given Australia has no inheritance tax of any kind. A recent report by Minh Ngoc Le found that rather than help reduce the burden on taxpayers, the overwhelming benefit of the superannuation tax concession is going to those “who were never likely to be eligible for the age pension. This means that not only is the government now having to pay for the age pension it is now also paying for those who do not need any assistance to live very comfortably in retirement.

Superannuation is not inheritance, and the government should not be funding the inheritance of the wealthiest in society.