The Government’s proposed objective for superannuation, to be set in legislation, is “inadequate and lacks ambition” says the SMSF Owners’ Alliance.
A Senate committee is conducting an inquiry into the Superannuation (Objective) Bill 2016, which would legislate the following as the primary objective for superannuation:
The primary objective of the superannuation system is to provide income in retirement to substitute or supplement the age pension.
The SMSF Owners’ Alliance (SMSFOA) says, in a submission to the inquiry, this positions superannuation as merely having a supporting role for the age pension.
“It is a missed opportunity to position superannuation as the main plank of a comprehensive retirement incomes policy that encourages Australians to take responsibility for their own financial security in retirement rather than rely on the taxpayer funded age pension,” says the SMSFOA.
“As Australians live longer and spend longer in retirement it is imperative to boost their savings via superannuation so they do not become a burden on the next generation.”
“The role of the age pension should be a social safety net for Australians who are unable to save enough to fund their own retirement.”
The SMSFOA proposes the following as the objective for superannuation:
The primary objective of the superannuation system is to give every working Australian the opportunity and encouragement to save enough so that they can fund an income in retirement that allows them to maintain to a reasonable degree their living standard after retirement.
The SMSFOA is also critical of including the subsidiary objectives in the Bill instead of regulations and the Statements of Compatibility – saying the objective is so broad that “virtually any legislation changing the terms of superannuation can be justified”.
“It is not beyond the wit of any Ministerial adviser or Treasury official to devise a Statement of Compatibility that will satisfy this requirement.”
“Requiring Statements of Compatibility does not inhibit any government from further grinding away the benefits of superannuation.”
The Superannuation (Objective) Bill 2016 was introduced to the Parliament in early November. However, unlike other superannuation legislation, it did not pass before Parliament rose for the year. The Bill is currently before the Senate, with the inquiry due to report by 14 February 2017.
Setting an objective for superannuation in legislation was a recommendation of the Financial System Inquiry. However it was also part of the recommendation that the objective had bipartisan support, but the Labor Party does not support the proposed objective. The objective has also been criticised for not including adequacy.