Bipartisanship on superannuation objective not yet reached

legislated objective superannuation, bipartisan, to provide income in retirement to substitute or supplement the Age Pension, Financial System InquiryThe Coalition and Labor have yet to agree on the objective for superannuation to be put into legislation.

The Financial System Inquiry (FSI) recommended that an objective for superannuation should be set out in legislation. This recommendation was adopted by the Government and following a consultation process it settled on the same words as suggested by the FSI:

To provide income in retirement to substitute or supplement the Age Pension

“In other words, it should be used to increase self-sufficiency in retirement, not to accumulate unlimited wealth to be passed on to the next generation,” said Minister for Revenue and Financial Service Kelly O’Dwyer in an address to the Financial Services Council Leaders’ Summit.

“Having a clear, agreed objective will provide greater long-term confidence and policy stability, as well as a yardstick for assessing proposals for policy change.”

Shadow Treasurer Chris Bowen was also supportive of an objective for superannuation, in a speech to the same summit.

“One of the areas where the government and Labor worked productively last term was on a superannuation objective,” he said.

“Having an agreed and simple objective would mean that progress on superannuation could be measured against that objective.”

“It would also mean that new policy ideas could be tested against the criteria of whether they meet that objective.”

However it appears that there is yet to be bipartisan agreement on the objective.

“I note the government put out its own superannuation objective on budget night. This does not reflect an agreed bipartisan objective,” said Mr Bowen.

The Shadow Treasurer said that, prior to the election campaign, the Coalition and Labor has started “good faith” discussions, but “the calling of the election precluded those discussions being finalised”.

“It would be good to have this matter dealt with and to have an agreed, bipartisan legislated objective for superannuation this calendar year.”

“We will be happy to resume these discussions with the government and see us reach an agreement on this ASAP.”

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One Reply to “Bipartisanship on superannuation objective not yet reached”

  1. What is the purpose of having a Superannuation objective????

    Ah, future changes to Super will be based upon this objective. If the treatment of Super savings are not headed in the direction of this ‘objective’ then expect legislative change to ultimately fulfil this ‘objective’. …. That’s pretty straight forward!

    And the suggested objective is, “To provide income in retirement to substitute or supplement the Age Pension.” Yep, that also sounds pretty straight forward .

    So what is the problem adopting this objective???? As they say, the ‘devil is in the detail’.

    ‘To provide income in retirement’. Umm, the transition to retirement Super arrangement now in place would be outside of this objective!!!! Think about that and reread that phrase!!!!

    Next, ‘to substitute …. The Aged Pension’. To ‘substitute’ can mean ‘instead of’ or ‘to replace’. If you have a life time of Super Savings and had the opportunity to save more but didn’t … regardless of your current wealth … can you now be ineligible from claiming any Aged Pension???? Sounds unrealistic??? If you have a good Super balance at retirement and spend it quickly or give it away to your children would that be consistent with the objective of Super??? Think of the gifting rules and the Aged Pension. Would Super savings be regulated to how much you can withdraw from your Super savings????

    ‘to … supplement the Aged Pension.” Supplement, what a nice word that has at least two meanings. It may mean ‘to make whole or to complete’. Umm, Super would mean that you could save and be paid out of your Super saving an amount no more than what the Aged Pension would pay. And if your saving would only pay you less than the Aged Pension then you could then claim part Aged Pension. No?

    The above is how some future politicians could interpreted this ‘objective’ and pass legislation to fulfil the objective.

    Trying to consider to what the objective really means to those with Super is not straight forward as these words mean different things to different people. My interpretations would not have universal acceptance but could others in power be of this view?

    To help interpreted what the objective really means would be to consider what we know it does not mean.

    “In other words, it should be used to increase self-sufficiency in retirement, not to accumulate unlimited wealth to be passed on to the next generation”

    Ouch!!! So save Super to substitute or supplement the Aged Pension means that you can’t (1) accumulate unlimited wealth (2) to be passed on to the next generation.

    (1).”unlimited wealth” in this context is almost meaningless. Can anyone ever accumulate unlimited wealth??? That’s like trying to add 1 to infinity!!!

    (2). The objective would prevent you from passing on (unlimited) wealth in Super savings to you children and grand children!!!!!

    Umm, if you die is your Super balance then forfeited to the State???? It can’t go to your children as that would be outside the objective why you have Super savings!!!!!

    To say the last, Super savings is and will continue to be a risky business!!!!

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