Proposed objective for superannuation “inadequate and lacks ambition”

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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.

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  1. I totally agree that the objective has to have some connection or relevance to the living standard that a person or couple enjoyed pre retirement. There are clients that live comfortably with a combination of super pension and part age pension and there are clients that require substantially more to enjoy their preferred lifestyle in retirement. To have an objective of substituting for the Age Pension is losing the opportunity to lift our aspirations to save for our chosen retirement living standard and at the same time benefit our Nation’s finances. I feel the proposed objective will not engage people in the desired way.

  2. This pathetic objective merely demonstrates the lack of passion for superannuation on the part of the government. Sadly, this is often par for much that goes on in main stream politics in this country. As for the minister, to me, she shows no true enthusiasm ( or talent) in regards to super.

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