Legislated superannuation objective has widespread support

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Financial System Inquiry, submissions, legislated objective superannuation systemOf all the superannuation related Financial System Inquiry recommendations the one for a legislative objective for the superannuation system appears to be the least controversial, with widespread support from a range of organisations.

The final report of the Financial System Inquiry recommended:

Objectives of the superannuation system

Seek broad political agreement for, and enshrine in legislation, the objectives of the superannuation system and report publicly on how policy proposals are consistent with achieving these objectives over the long term.

The Australian Institute of Superannuation Trustees (AIST) supports the recommendations and calls on the Government to “convene a summit on the objectives for superannuation at the earliest opportunity during 2015.”

“This summit should involve consumers, employers, the superannuation industry, Government, other political parties and regulators.”

The SMSF Association also supports a legislated objective for superannuation, however “does not believe that legislated objectives will assist in delivering greater stability to superannuation policy.”

“We believe that stability can be brought to superannuation by removing superannuation policy decisions from the annual Federal budget cycle, and instead, tying them to a longer-term review cycle.”

The accounting bodies support support a legislated objective for superannuation, with CAANZ saying “we have long argued that there is too much tinkering within superannuation and against its frequent use as a budgetary tool in the annual Federal Budget. The specific changes made are often not related to efficiencies or equity in the super system but the need of the government of the day to ‘balance the books’.

AMP supports the recommendation saying “for too long the system has been the subject of partisan debate, frequent changes to the policy and taxation settings. This has led to a reduced level of confidence in the system from a consumer perspective.

According to the Australian Bankers’ Association, the “banking industry fully supports seeking political consensus on the objectives of the superannuation and retirement income system.” Though the organisation says this should only occur after a “period of broad political consultation.”

Though the recommendation is widely supported, some do not think it will achieve its purpose. The ACTU “doubt the Inquiry’s proposals will secure the stability and consensus it seeks.” This is because the different views on the purpose of superannuation “are not the result of a misunderstanding or lack of understanding about what superannuation should be for.”

“Many of the very different views about how superannuation should be taxed, regulated and managed reflect sharp differences in material and political interest.”

“Secondly, the primary objective proposed by the Inquiry, even if enshrined in legislation, is very unlikely to change existing attitudes and behaviours among industry participants and political representatives. This is because it lacks measurable and limiting content. It is sufficiently vague that all those institutions and political actors involved in superannuation can pay lip service to it while continuing to behave in ways they have always done,” said the ACTU.

Perhaps that is why the recommendation for a legislated objective for superannuation has such support – because unlike the other recommendations it doesn’t cost anybody anything.

Treasury has released submissions received in response to the final report of the Financial System Inquiry.

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