“From 2025–26, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.

“This is expected to apply to around 80,000 people, and they will continue to benefit from more generous tax breaks on earnings from the $3 million below the threshold.”

According to the Financial Services Council (FSC), this number is far from accurate. According to the body, if the $3 million cap remains unindexed, the true figure is closer to 500,000 taxpayers.

FSC chief executive Blake Briggs said: “If the government does not index the proposed $3 million superannuation balance cap, 500,000 Australian taxpayers will breach the cap in their life and face a 30 per cent earnings tax, including 204,000 Australians under the age of 30.

“500,000 impacted Australians is over six times the current government estimates, which only takes into account balances that are currently over $3 million,” Mr Briggs said. 

“Leaving the cap stuck at $3 million will mean that in today’s dollars a 30-year-old will have a real cap of around $1 million, calling into question the intergenerational fairness of an unindexed cap.”

Mr Briggs stressed that in the superannuation system caps are indexed to ensure generational fairness, “so that each generation gets the same outcomes and benefits from the superannuation system”.

Sydney-based asset management firm Plato Investment Management agreed with the FSC, calling the lack of indexation an “enormous flaw” in the current proposal.

“It is perplexing the Treasurer has indicated this cap will not be indexed over time,” said Dr Don Hamson, managing director of Plato Investment Management.

“Currently the move is expected to impact 80,000 people, or just 0.5 per cent of super accounts with balances of over $3 million in today’s money, however we have inflation currently running at 7.8 per cent, which will erode the real value of the $3 million cap over time.

“This means a lot more than 0.5 per cent of superannuation balances will eventually be taxed at 30 per cent”.

Dr Hamson demanded research into how many people would be impacted in the future, adding that in 30 years the $3 million cap would be comparable to a $925,000 balance today.

“You only need to do some basic math – if inflation ran at 4 per cent per annum for the next 30 years, and remember inflation is currently 7.8 per cent, a $3 million cap would be equivalent to just $925,000 in today’s dollars,” he said.

“Inflation will mean that many, many more individuals will be hit by this cap in the future if it is not indexed to inflation. I think voters need to know how many people will be impacted in say 30 years’ time, not just how many are impacted now.

“The other big question for the majority of retirees and even those nearing retirement is – what other changes is this government likely to make next?”

The FSC added that it would work with the Treasury through the consultation process on details that it said still need to be resolved, including the long-term impact if the $3 million threshold is not indexed.