"So threatening to take it away is quite significant for some."

Labor has promised, if elected, to stop individuals and super funds claiming refunds for excess imputation credits not used to offset their tax liabilities. The measure is aimed at wealthy investors, with Labor forced to exempt full and part pensioners after a backlash.

Dubbed the "retiree tax" by the government, the policy is expected to improve the budget bottom line by $55.7 billion over a decade.

'Home bias'

According to the ANU modelling, the loss of the refunds was like reducing superannuation balances by 8 to 9 per cent. For a person with $500,000 in their super balance and access to imputation credits of 1.37 per cent a year, this can add up to a reduction of about $44,000. For someone with $1 million in their super, it can be as much as $95,000.

Associate Professor Warren said having access to imputation credits meant many investors had a considerable "home bias" towards Australian equities.

He said a 65-year-old with $500,000 in their super fund seeking to live off $42,764 a year – the amount estimated to provide for a comfortable standard of living for a single – should hold 46 per cent in Australian equities in their portfolio to meet that target.

"When imputation credits are excluded in the analysis, a retiree should hold 26 per cent in Australian equities. It's a considerable difference," Associate Professor Warren said. "A change in policy might result in retirees providing less support to Australian companies via the investments they make," he said.


The analysis also found providing franking credits over the course of a person's retirement cost taxpayers $30,000 for someone with a $100,000 balance and $80,000 for those retiring with a $500,000 balance.

Associate Professor Warren said while Labor's policy may be targeted at the wealthy, over time as people retired with bigger superannuation balances, a greater number of people would be affected by the loss of refunds.

Shadow treasurer Chris Bowen said the ANU paper did not model Labor's policy and failed to take into account the pensioner exemption, which was a critical component.

"The pensioner guarantee means that those receiving the full or part pension (or other qualifying payments) will receive their franking credits," Mr Bowen said.

"More than half of all cash refunds going to self-managed superannuation funds are to those with balances of more than $2.4 million. Given the vast majority of retirees with superannuation savings are in super funds with tax liabilities, most retirees won't see much of a change to their retirement incomes under Labor's policy."

Responding to the claim of "home bias", Mr Bowen said the policy would help de-risk the retirement savings pool by encouraging people to diversify their portfolio.