1 Tax and super – unfinished business

On superannuation taxes the government’s main response to the Henry review has been to lift the compulsory contribution rate, from 9 to 12 per cent of wages by 2020. This would eventually rectify the continuing inadequacy of most superannuation balances at retirement. Unlike the government, Henry acknowledges the adverse-selection and supply-side problems stunting the Australian market for longevity insurance. We propose a resolution that would give workers a choice between either or both of two kinds of super account, one taxed under the current arrangements (or those proposed in the Henry review) and the other only in retirement and at the marginal rate of the retiree. The new accounts would be reserved for the purchase of lifetime annuities.