When Keating introduced compulsory superannuation in 1992, it was always going to be a future target for ‘taking advantage of’ and raiding by government (as had happened in the past for those old enough to remember).
This meant that 3% (now 9.5%) of the national wage had to be ‘parked’
somewhere every week ( often not in ‘new’ investments but in higher prices for existing shares etc).
At that time, individuals could load unlimited additional amounts of money into their super. Eventually
the target got too big for politicians to ignore the ‘honey pot’ and the have-nots to scream ‘unfair’. It was
always going to be a problem, and the current system should have been addressed long ago.
Whatever happens will never seem fair to some, but here are some suggestions
Firstly, establish what is a generous upper limit (after tax) income for a retiree. Say $80,000..
Superannuation was never meant to be left as an inheritance. Establish actuarially what basic sum (say $1.6m) is required at retirement age ( say 65) to last a relatively long life (say 90). That ‘pension’ would be a compound of initial sum plus income it generated, leaving a zero balance at end.
Don’t punish existing funds of those who have complied in the past. Quarantine those funds that exceed the basic sum but still allow the addition of compulsory contributions. Tax 15% in accumulation phase, zero in pension phase.
Still allow voluntary top- ups (currently limit $35,000) until the basic sum is reached.
Not perfect for all, but something to build on.