It is essential to include the concept of adequacy in the legislative objective for superannuation, says the SMSF Association.
A Bill to set in legislation an objective for superannuation is currently before the Parliament, the Superannuation (Objective) Bill 2016. However opinion on the objective are divided, with the superannuation industry calling for the objective to include adequacy. However some groups, including the Grattan Institute, support the currently proposed objective:
The primary objective of the superannuation system is to provide 3 income in retirement to substitute or supplement the age pension.
SMSF Association CEO Andrea Slattery said, in a submission to a Senate inquiry into the Bill, that: “Adequacy must be included in the objectives of the superannuation system so that our retirement system maintains its goal to provide people with adequate retirement savings to deliver a ‘financially secure and dignified retirement’.”
“This upholds an aspirational element to superannuation and encourages people to save during their working life to fund a self-sufficient retirement.”
Though, the Association’s submission did acknowledge that there is no currently accepted definition of ‘adequate retirement savings’. However the Association says this issue could be addressed by including adequacy in the subsidiary objectives, proposing an objective of “providing a secure and dignified retirement”.
Slattery said it is “most important” for policymakers to use the objectives of superannuation to evaluate future changes to superannuation.
“This will help deliver greater certainty for superannuation fund members and provide increased transparency on future government policy and its effect on superannuation.”
“With a retirement system that is still to mature, the importance of setting these objectives down in in law correctly is essential. This is why we are so adamant that the concept of the superannuation system aiming to deliver a ‘secure and dignified’ retirement must be included in the Government’s final objectives for superannuation.”