The recommendation to put in legislation an objective for the super system comes from the Financial System Inquiry (FSI) – which was started by the Coalition Government.
The FSI called for the Government to “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 Government accepted the recommendation, but implementation has stalled. The Superannuation (Objective) Bill 2016 was last debated in the Senate in November 2016 – seemingly a result of the lack of support for the Government’s chosen objectives, which were the subject to a consultation process criticised as “superficial” by Industry Super Australia.
The latest call to legislate objectives for superannuation came at the SMSF Association 2019 National Conference, where an expert panel agreed that the super system urgently needs an objective so there can be a more holistic approach to retirement incomes policy making.
SMSF Association Head of Policy Jordan George, Mercer Senior Partner David Knox and BT Financial Group Chief Executive Officer Brad Cooper all agreed that the lack of an objective set in legislation was an obstacle to sensible super policy. The panel noted that an objective could help implement the recommendations stemming from the Royal Commission and Productivity Commission reports.
‘Adequacy’ is a core part of the dispute over what should be in a legislative objective for superannuation. There is concern that the inclusion of adequacy could require tax concessions on superannuation to be increased, and vice versa.
The panel views the lack of adequacy in the objectives as a key reason they haven’t been legislated. Though they also noted that there was broad support across the superannuation sector for the policy.