15% Tax for Aussies Earning More Than $100,000 on Pensions as Part of Changes to Superannuation System

Beginning July 2014, Australians who earn more than $100,000 on their superannuation pensions and annuities will be taxed at 15 per cent. The change is part of the amendments to the country's superannuation system announced on Friday.

It is expected to affect about 16,000 of Australia's highest earners with about $2 million in superannuation assets and would enjoy their superannuation tax-free only until June 30, 2014. They just represent about 0.4 per cent of the estimated 4.1 million retirees in 2014-15.

Treasurer Wayne Swan, who announced the change, said it would improve the fairness and sustainability of the system, taking into consideration the rising population of seniors in the country since tax concessions for high-income earners were found to be too generous.

"Why should someone who has millions of dollars in a superannuation account pay no tax on their earnings while someone on $80,000 pays a marginal tax rate of 37 cents in the dollar on every additional dollar they earn," ABC quoted Mr Swan.

He said the reforms in the superannuation system addresses errors which results in working Australians earning average wages provide excessive support to people who enjoy millions on their superannuation account.

To oversee the changes, the federal government will appoint a council of custodians, said Superannuation Minister Bill Shorten.

Opposition leader Tony Abbott criticised the reform for causing a $1 billion hit on people's retirement savings. Financial Services Council Chief John Brogden, the former New South Wales Liberal leader, said the changes caused uncertainty in Australia's superannuation industry to hit an all-time high.

"There are 10 million Australians who are putting money into their super every day. It's 9 per cent of their salary now and it'll be 12 per cent over the next two years - a good policy from this government that we strongly support," ABC quoted Mr Brogden.

"But if government keeps tinkering and edging away, [delivering] death by a thousand cuts every budget with superannuation - we need to draw a line in the sand and make it very clear to government that we will defend superannuation and we will defend Australians who want their savings to be left alone," he added.

The changes are expected to earn for the federal government an additional $900 million.