Self-managed superannuation fund (SMSF) advocates are warning the Government to back off as it considers raiding the system to pay for its policy commitments.

Australians have a staggering $1.4 trillion squirreled away for their retirement - and self-managed super funds are the biggest sector of the superannuation industry.

Do-it-yourself retirees have more than $400 billion in assets, but the Government looks set to target some of that money in the May budget, with Prime Minister Julia Gillard refusing to rule out tax increases on super.

Duncan Fairweather, the executive director of the Self-Managed Super Funds Owners Alliance, says he fears his members are being lined up to take a hit.

"If they are going to raise any sort of reasonable amount of revenue to fill the black hole that they're trying to fill, then they are going to have to hit middle-income earners because that's where the bulk of the funds are," he said.

Yesterday Ms Gillard refused to rule out changes to super when asked if her Government would be targeting retirement savings.

Mr Fairweather says any changes will tarnish Labor's legacy.

"The vision that Bob Hawke had 20 years ago is fading," he said.

The Owner's Alliance has done some calculations based on a scenario where a 30-year-old makes the mandatory super commitments over their working life.

Mr Fairweather says at that rate, they will not have nearly enough to retire on.

"When they do reach retirement, where they can expect to live for another 23 years, they will run out of super after just 11 years," he said.

"That is less than halfway through their retirement and then they will have to fall back on the pension."

He says that situation is "completely unsustainable".

"We think that the Government should bear that in mind when they are framing the budget," he said.

The debate on what earnings level any tax on super will kick in at is raging, with former Labor chief whip Joel Fitzgibbon yesterday saying some families on $250,000 per year are "still struggling".

"I welcome any changes but only at the very, very high end," he said.

"For example, coal miners in my electorate earning $120,000, $130,000, $140,000 a year are not wealthy - that's the sort of money you need these days with property prices, etc as they are.

"In Sydney's west you can be on a $250,000 family income a year and you're still struggling - particularly given property prices."

Adrian Raftery, a lecturer in business and accounting at the University of Technology in Sydney, says one size does not fit all when it comes to taxing the contributions of high-income earners.

"It needs to be a lot more tailored," he said.

"It is people's retirement savings, and there's no point in just going across the board and slashing, you know, 46.5 per cent of everyone's super if they earn a certain amount of income if they don't have that much of a balance to start with."

Original article published http://www.abc.net.au/news/2013-03-28/diy-super-funds-up-in-arms-over-budget-speculation/4598740