How much do you reckon home owners are going to need to stash away for their  retirement as a couple to leave them better off than if they were reliant on the Age Pension?

If you assume they were getting 5% from their super account and the Age Pension per couple is a bit over $35,000 a year, they'd need to have a super account with just over $700,000 in it.

That is approximate, but it’s a pretty scary number because that means if you have any less in the jar, there is a growing set of evidence that you'd be better off spending your super and going on the pension. More on that later.

And that mismatch issue is something that opposition leader Bill Shorten and shadow treasurer Chris Bowen should have in the back of their minds as they rail against fat cats dodging tax and collecting refunds from the Tax Office, because those supposed cats don't have enough taxable income to offset the deductions that dividend franking allows.

Yes, there are people out there who have been getting something of a free ride in having no taxable income but lots of assets, including shares paying fully franked dividends. The Grattan Institute notes that at the moment, a rich retiree could be pulling down $180,000 a year in franked dividends and paying no tax at all. 

I distinctly remember a captain of industry telling me in an awestruck voice that his non-working wife was enjoying refunds of franked dividends from her share portfolio, with the air of a man who couldn't quite believe the Tax Office's largesse.

But The Grattan Institute has also noted that this proposal would see 33 per cent of the new tax paid by high wealth households (who one assumes can afford it) and 60 per cent paid by Self Managed Super Funds, which in most cases don't have so much room to move. No wonder they're making the most noise, although Labor has now walked back slightly from the original proposal. 

Labor originally said this move would save $59 billion over ten years but in the last 48 hours has signalled that it would exempt existing age pensioners from the dividend imputation shake-up, and would "grandfather" any Self Managed Super Fund with one or more members in pension phase as at March 28.

That would at least make life easier for pensioners at the bottom of the pile and would only cost the government $700 million over the ten years, cutting the notional saving to $55.7 billion.

(I say notional, because savers always react to changes in the rules. Most relevantly here, some will give up their plan to be self-funded and go on the pension, thus reducing the savings.)

The new amended Labor plan won't cover off on the many couples of Self Managed Super Fund trustees who are not yet in pension phase.

Treasury figures suggest that there are around a million Australians with taxable income of less than $37,000 a year who may be affected, and you would be mad to assume they are all fat cats. That's the point: some have clever accountants but a far bigger number of others are struggling to set themselves up as self-funded retirees.

A couple of points here. One, as many wiser heads than mine have been pointing out, that money those people are getting had tax paid on it by the company in the first place, so it's a refund of what would otherwise be double taxation. In simple terms, it's their money.

Two, and this is really important, if the Government (Coalition or Labor, take your pick) is serious about reducing retirees' dependence on the Age Pension, they are going to have to wake up to that old capitalist notion of Incentive.

While Australia's compulsory superannuation system is getting closer to full maturity every day, it still has not got there, partly because the "snowball" of compound interest started pretty small with a compulsory 3 per cent a year employer contribution in 1992 . But also it's because most experts believe a 15 per cent employer contribution is going to be needed in the long run.

What rankles many people is that federal politicians and the public service get that 15 per cent already, while most workers are still in the foothills at 9.5%. The government has been aware of this problem and employers are going to be moved up gradually up to 12 per cent by July 1 2025.

So the workers will still be three per cent short of the pollies and the public service even then, assuming of course that the latter don't get a further leg up in the interim.

In short, we're in a world where it's going to take a while before most workers' super is going to be enough to take them off the public purse.

Conventional wisdom says that only 20% of retirees are genuinely self-funded and not still reliant on a part or full pension. Recent numbers from ASFA, the Association of Super Funds of Australia, indicate that it's now moved up to 25%, and that by 2025 it will be up to 40%. 

But before you cheer, be aware that by that time around 20% of people aged 67 will still be in paid employment, which is almost double the current level.  

The big bogey in all of this for anyone aiming to be self-funded in retirement is what's called the savings trap, whereby individuals at the top end of the pension cohort, with super savings of say $440,000, currently end up enjoying a bigger income stream than those who have saved up $800,000, because the latter don't qualify for any kind of pension.

And by the way, there's been a lot of criticism about how the family home is exempt from the means test that determines pension eligibility. That might look like a scam but there's really only one way in which retirees can benefit from their tax-free home, and that is by selling it. Until then, that capital gain is just a book entry.

The right-leaning Institute of Public Affairs put out a note last week criticising the proposed Labor move, which is no great surprise, but added a solid point about how unfair it is to change the rules affecting investment systems that require a long time frame.

"Retrospective legislation is widely regarded as a transgression of the rule of law because it is arbitrary and inconsistent with rea¬son¬able expectations of the affected parties," it said.

Politicians, please note.