The Grattan Institute think tank is urging both sides of politics to drop the planned increase in the compulsory superannuation guarantee, saying Australians are already on track for adequate retirement incomes.
Raising the compulsory contributions would not only reduce workers' take-home pay during their working lives, but also would hit the federal budget.
"If our politicians really want to help low-income workers and are serious about fixing the federal budget, they should abandon plans to raise the super guarantee," it says in a new analysis released on Monday.
They would also need to act soon - even though the next incremental increase towards 12 per cent from 9.5 per cent now is scheduled for July 2021 - because new enterprise agreements currently in negotiation will take into account the guarantee increase when setting wages.
The institute says the super guarantee is no "magic pudding" because as the Henry tax review pointed out, higher compulsory super contributions are ultimately funded by lower wages.
The main beneficiaries from a higher super guarantee will be high-income earners, who already reap most of the benefits from generous superannuation tax breaks.
"By being forced to put even more into super, they'll no longer pay income tax on that income," it says.
Instead they will be taxed at a flat 15 per cent rate on those contributions.
It says a Treasury analysis in 2013 estimated that the annual cost of superannuation tax breaks will exceed savings on the age pension by about 0.4 per cent of GDP in 2020 and will continue to be a net cost to the budget until about 2060.
"And then there will be 80 years of accumulated budgetary costs to pay back before the commonwealth government breaks even," the institute says.