A SENIORS lobby group says the federal government has fallen short on boosting the cap on superannuation concessions for retirees.
Treasurer Wayne Swan announced on Friday potential changes to tax earnings on superannuation would affect around 16,000 retirees.
Among the measures are a tax exemption on superannuation earnings supporting pensions and annuities to be capped at $100,000, and anything above that level taxed at a rate of 15 per cent.
The measures would affect those with superannuation assets worth more than $2 million.
National Seniors chief executive Michael O'Neill says his group welcomes the government's plans but says they have fallen short in the amount retirees can contribute to their retirement savings without extra penalties.
Mr O'Neill says the $5000 increase in the $25,000 superannuation concession cap for people aged at least 60 is welcome.
"But it is still $20,000 short of the $50,000 cap average earners had counted on last year and the government had promised for 2014," he said in a statement.
The cap was halved in 2011 and extended for two years. It had been expected to rise to $50,000 in 2014 for people aged 50 and over.
Left-wing think tank, the Australia Institute, said the government has failed to cut the cost of tax concessions on superannuation by one per cent.
Institute chief executive Richard Denniss said tax concessions for superannuation were the fastest growing expense in the federal budget and the government had done little to fix the system.
"Today's announcement will do nothing to stop the cost of tax concessions doubling in the next five years and does not address the bizarre nature of the scheme that delivers more to the top 10 per cent than it does to the bottom 60 per cent," Dr Denniss said.
Treasury has estimated the tax concessions on super would cost the budget $32 billion this year and $45 billion by 2015, yet the changes would collect under $250 million in extra revenue.
Australian Greens leader Christine Milne said there should be a more equitable distribution of super tax concessions.
"But the government's mishandling of the issue has unnerved the whole community and made having a sensible discussion about reforming tax concessions almost impossible," she said.
Senator Milne said the government need to fix the mining tax, now that it had retreated from super reform, to fund policies such as education and health care.
The Financial Planning Association (FPA) said it understood the superannuation system needed to become sustainable, with more baby boomers retiring.
"Whilst we do not support increases in superannuation taxes we understand the changes are needed to obtain sustainability and certainty for the retirement system," FPA chief executive Mark Rantall said in a statement on Friday.
Mr Rantall applauded the establishment of the Council of Superannuation Custodians, as it would remove superannuation from the annual federal budget cycle and allow an independent body to set policy for the system.
A national lobby group for seniors, COTA Australia, said older Australians would receive a better deal from the measures announced on Friday.
"Seniors will welcome the superannuation changes as they increase fairness and will assist those on lower incomes," COTA Australia chief executive Ian Yates said.
Mr Yates said it would end the concerns seniors felt amid speculation about what could happen to their retirement savings.
Wealth manager Challenger Limited said the proposals should address the emerging concerns about the impact Australians living longer will have on the population and governments.
"All Australians need secure lifetime retirement income and many could be retired for 25 years or more," Challenger chief executive Brian Benari said in a statement.
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