Speaking at a Trans-Tasman Business Circle luncheon in Sydney on Friday, BT chief executive Brad Cooper said it is "entirely appropriate" to place a limit on the tax concession wealthier retirees receive.
"The guiding principle should be that tax concessions remain in place as long as they are being used to build savings that generate an income in retirement that affords a decent quality of life," Mr Cooper said.
The tax-free status of pension-phase superannuation should not be used to build "incredibly high levels of wealth" or serve as a "proxy estate planning tool".
"There should be a cap on the amount that people are able to roll over from accumulation to pension," Mr Cooper said.
Average weekly ordinary time earnings (AWOTE), being the "fairest and simplest benchmark" for the debate, should be used to gauge the amount of money retirees can use to draw a pension from.
Two times AWOTE, or $150,000 a year, can be generated by a maximum super balance of $2.5 million (given the most conservative return estimates), Mr Cooper said.
Under Mr Cooper's proposal, Australians would still be able to have more than $2.5 million in super – but the income it generates would not be tax-free.
Only 0.5 per cent of Australians currently have superannuation balances in excess of $2.5 million, he pointed out.
"So while such a change is important, it is only a small piece of a much larger puzzle. A bigger issue is how we improve retirement outcomes for low income Australians," he said.
"In this regard, I believe, in the maturing system, we must maintain the low income superannuation contribution.
"It’s unfair that our poorest super savers are taxed on their compulsory superannuation contributions and it makes even less sense that they are taxed on their voluntary contributions.
"If you make less than $37,000 a year, why would you sacrifice income that you pay no tax on and put it in your super where it will be taxed at 15 per cent on the way in?" Mr Cooper asked.
The BT chief executive also argued that any changes to the superannuation system should be considered within the Intergeneration Report, which is published every five years with a 40-year time horizon.
Mr Cooper also recommended tax breaks to help women make up for the 17 per cent 'gap' between their average superannuation balance and male balances; and an earlier preservation age of 53 for indigenous Australians to make up for the group's lower life expectancy.
